Disk Array Sales Continue to Recover in Q3, Storage Software Struggles

January 4, 2010 Timothy Prickett Morgan

In the prior issue of The Four Hundred, we gave you the rundown on Gartner‘s casing of sales of external, controller-based disk array sales in the third quarter of 2009, and in this issue, we present IDC‘s take on disk arrays for the quarter.

The way IDC dices and slices the data, you can get a feel for how external arrays (which attach to servers through Fibre Channel, iSCSI, converged storage-server Ethernet or InfiniBand, or other means) are doing as well as internal arrays, which are generally based on PCI-Express RAID disk adapters tucked into the servers.

According to IDC’s data, overall disk array sales fell by 9.6 percent in the third quarter of 2009 to just under $6 billion. External disk arrays accounted for nearly three-quarters of all disk array revenues generated in the quarter, coming in at $4.37 billion globally, down 10 percent from the year-ago period. Internal disk array sales came to $1.63 billion in the quarter, down only 8.3 percent and boosted significantly by a stunning 36.8 percent increase in internal array sales by Dell in the quarter. The mainstreaming of small form factor disks and perhaps aggressive price cutting seems to be helping the Dell cause when it comes to tucking arrays inside of PowerEdge servers.

Here’s how the various storage vendors stacked up in Q3, according to IDC:

Worldwide Disk Array Sales, Q3 2009
External Arrays	Q3 2008	Q3 2009	Change
EMC	$1,136	$1,059	-6.8%
IBM	$617	$577	-6.5%
HP	$609	$517	-15.1%
Dell	$447	$407	-8.9%
NetApp	$395	$381	-3.5%
Others	$1,654	$1,429	-13.6%
Total	$4,858	$4,370	-10.0%

Internal Arrays	Q3 2008	Q3 2009	Change
EMC	$0	$0	NA
IBM	$395	$362	-8.4%
HP	$709	$596	-15.9%
Dell	$277	$379	36.8%
NetApp	$0	$0	NA
Others	$392	$288	-26.5%
Total	$1,773	$1,625	-8.3%

Overall	Q3 2008	Q3 2009	Change
EMC	$1,136	$1,059	-6.8%
IBM	$1,012	$939	-7.2%
HP	$1,318	$1,113	-15.6%
Dell	$724	$786	8.6%
NetApp	$395	$381	-3.5%
Others	$2,046	$1,717	-16.1%
Total	$6,631	$5,995	-9.6%
Source: IDC

As you can see, Dell was able to get actual storage revenue growth in the quarter, which is quite a feat. Something interesting is going on there. Hewlett-Packard continues to lose market share and EMC and IBM continue to gain revenue market share against HP in the overall disk array storage arena, which has to be a concern for Big Gray, which dominates the X64 server racket.

“Although the external disk storage market posted another year-over-year decline in the third quarter, the rate of decline has started to slow,” said Steve Scully, research manager for enterprise storage at IDC, in a statement accompanying the figures. “Moreover, the market experienced a sequential gain over the previous quarter, with many of the top storage vendors posting increases. The stability in the storage market that IDC first began to see last quarter is now being felt more broadly by storage vendors.”

IDC added that storage software sales (not included in the figures above, which are only for hardware) fell by 7.9 percent to $2.87 billion in the third quarter. Software is a hard sell right now, apparently, and was barely able to show sequential revenue growth from Q2 2009. Companies are probably focusing on adding capacity right now and will add software features later. EMC and IBM showed sequential growth in their storage software sales, but Symantec, Network Appliance, and CA, among the top five storage software players, all had sequential declines in their sales.

One intriguing bit of data you can derive from the IDC data is that storage software comprises about a third of the total storage spend in the most recent quarter, as it did a year ago. (In the third quarter of 2009, software accounted for 32.4 percent of the $8.87 billion in total hardware/software disk array spending.) Storage used to be mostly a hardware sale, and it is interesting to contemplate a time when software might become the dominant part of the storage stack. As flash becomes a part of the hardware side of storage–and radically raises the cost per terabyte of a storage subsystem even as it boosts performance–this seems unlikely.

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