Disk Array Biz Has Sympathy Pains With The Server Racket

June 24, 2013 Timothy Prickett Morgan

The general rule of thumb is that for every dollar that is spent on servers, there is another 50 cents or so spent on storage and another 50 cents or so spent on networking. That is the ratio across the industry, and the server class average is brought up mightily by mainframes and other big iron that is pricey indeed. While server and storage purchases are not always directly tied to each other, they are often part of a single system upgrade or new installation and, in many cases, disk arrays are in fact internal to the server. So there is plenty of linkage.

So it is not really much of a surprise to find out that storage array sales took a dip in the first quarter just like servers did, according to the reports from IDC and Gartner alike. IDC has just released quarterly report cards for the disk array industry and its players, and everybody is feeling the pinch–some more than others.

“Reduced demand within developed markets caused global sales of external disk systems to fall slightly during the first quarter of 2013,” explained Eric Sheppard, research director for storage at IDC, in a statement accompanying the stats. “Emerging markets drove growth within the global market but this was not enough to offset declines elsewhere. Independent storage suppliers were better positioned to capitalize on this new level of demand than their competitors, some of whom are currently working through product transitions and declining server sales.”

To be more specific, IBM and Hewlett-Packard are having the hardest time in both the external and internal disk array sub-markets. Here’s how the external disk array sales by vendor break down, according to IDC’s stats for the first quarter:

Sales of external disk arrays of all types–network-attached storage (NAS) and storage area network (SAN) devices–were down nine-tenths of a point to $5.91 billion. IDC does not give out the capacity figures for external arrays in its public statements, but if you add up internal arrays that are tucked up inside the server skins with the outboard arrays, then companies consumed 7.8 exabytes of total capacity, an increase of 26.4 percent compared to the first quarter of 2012.

Considering the database and disk compression, thin provisioning, and other technologies that are being deployed to try to keep these storage capacity numbers down, that kind of growth, which is about half of what it was during the dot-com boom by the way, is still astounding. And the fact that overall sales of all kinds of storage arrays nonetheless down 3.2 percent to $7.74 billion just goes to show you how much price competition there is out there among disk array makers and peddlers.

If you do the math, internal disk array sales fell by 9.9 percent to $1.83 billion in the first quarter. HP’s internal disk sales were off 17.4 percent to $699 million, and IBM took a 42.2 percent hit to $295 million in the period. That is a big hit, followed up by a whopper.

If you look at the overall market, including inboard and outboard arrays, EMC managed to grow 3.8 percent to $1.8 billion. HP was ranked second in the biz, with $1.2 billion in revenues, but fell 17.4 percent (in both external and internal arrays). Dell blew by IBM with a stunning 16.7 percent growth rate, and raked in $1.08 billion in storage array sales. IBM fell 21.1 percent to $937 million, and NetApp rose by 4.5 percent to $879 million. All other vendors–and there are still lots of innovators coming into the market to replace the innovators that HP, Dell, and IBM have snapped up over the years–grew four-tenths of a point to an aggregate of $1.85 billion and comprised nearly a quarter of the market in terms of revenues.