The World Can’t Get Enough Disk Array Capacity
June 16, 2008 Timothy Prickett Morgan
While processors have hit a gigahertz wall somewhere around 3, 4, or 5 gigahertz, depending on the chip architecture, forcing chip makers to shift the use of Moore’s Law advances in chip manufacturing to multicore devices to pack more capacity into a single slice of silicon, disk makers have not, thus far, hit a capacity wall on drives. And as far as anyone can tell, the appetite for gigabytes just keeps on growing and growing. It is really quite astounding, especially when you consider the amount of garbage that must be stored on computers the world over.
According to the disk array counters at Gartner, sales of external, controller-based disk arrays (as distinct from internal disk arrays that often are sold in servers) rose by 10.2 percent in the first quarter of 2008 to $4.34 billion. Robin Burke, research vice president in charge of the quarterly storage report from Gartner, says that the amount of disk array capacity shipped rose by 48.9 percent, hitting 1.1 million terabytes. While this is not the 60 percent and higher capacity growth that the storage industry enjoyed during the dot-com build out, storage capacity shipments have pretty much kept pace despite the fact that Moore’s Law has move used from drives that had 10s of gigabytes of capacity a decade ago to drives that have a terabyte or more of capacity.
When Gartner ranks disk array sales by vendor, it counts sales by vendor, not by the original manufacturer of the product. In the external disk array space, some makers also have OEM agreements with other server makers, who slap their own labels on them after adding some of their own software or hardware features. Dell and Fujitsu-Siemens resell low-end disk arrays made by EMC, Sun Microsystems and Hewlett-Packard resell high-end arrays from Hitachi, just to name a few. (There are many, many more such deals.) Anyway, Gartner counts the money at the vendor level, so EMC and Hitachi, in these examples, actually generate more total revenue in external disk arrays than Gartner’s numbers suggest, but Gartner is restricting itself to direct sales to show who got the dough from the customers–and how much. Moreover, these revenues are only for the disk arrays, not for the extra software features that many companies buy. This is just a hardware number, and in many cases, the sale of an array is driven by software requirements such as snapshotting, clustering, thin provisioning, and so forth.
As you would probably guess, being in the IT racket for as long as you have been, EMC is the market leader in external disk arrays, with revenues of $1.05 billion in the quarter, up a respectable 13.5 percent from the first quarter of 2007. That sales rate gave EMC a 24.1 percent share of the market, a 7/10ths of a percent market share gain on a revenue basis. (Somebody at EMC got some nice bonuses, looks like.) As is the case in servers, IBM and HP are neck and neck, with Big Blue selling $492 million in external disk arrays in Q1, actually down 1.5 percent from the year-ago quarter, and HP’s sales fell too, down 7/10ths of as percent to $479 million. (Gartner did not elaborate on why, but I suspect that midrange disk arrays are seeing a lot of price competition, and maybe even from internal disk arrays inside new servers as vendors adopt small form factor drives.)
Hitachi took the biggest revenue hit, with sales down 12.4 percent to $437.5 million. It is unclear what happened here, but it could be price competition at the high end, with big IT shops pitting multiple vendors against Hitachi in its home Asia/Pacific market. Server sales are booming in the region, thanks to India, China, Singapore, Thailand, and other countries, and when it is possible to get a complete server-storage setup from IBM, HP, Sun, or Fujitsu, many companies go that way. (Anyway, someone at Hitachi is not getting bonuses with a revenue drop like that.)
Dell, which got into the storage business with EMC so it could get higher attach rates for storage among its largest server customers, is benefiting nicely from that strategy, with sales up 20.9 percent in Q1, to $382 million. The question is if Dell can hold that growth rate for a sustained period. Network Appliances, the originator of network-attached storage arrays, continued to grow sales, with Q1 revenues of $358.7 million, up 13.5 percent, matching EMC’s growth rate and helping to life the averages like EMC and Dell. Fujitsu-Siemens did something right this quarter, with sales up 45.6 percent to $237.9 million, followed up by Sun, with $214.7 million in sales, down 3.4 percent. The myriad other players in the external disk array space accounted for $693.6 million, up 33.6 percent in the quarter and really raising the class average quite a bit.
In addition to talking about the first quarter external disk array sales, Gartner put out figures for the entire 2007 year as well. In 2007, the world’s data centers spent $16.4 billion on external disk arrays, up 8.7 percent from 2006’s sales level. Midrange disk arrays were cited as the workhorse of the market for the year. In the fourth quarter of 2007, sales for external disk arrays rose by 11.9 percent to $4.73 billion.