The Vol­ume vs Value Chal­lenge

Stor­age ca­pac­i­ties are grow­ing but due to de­cline in price points, the seg­ment is grow­ing only in sigle dig­its in terms of value

Dataquest - - STORAGE -

Ex­ter­nal stor­age is an­other seg­ment that is see­ing the tran­si­tion to Flash. This seg­ment has come a long way from the days of NAS to SAN to uni­fied stor­age so­lu­tions. While the seg­ment grew in sin­gle digit, the cost of ac­quir­ing stor­age is steadily com­ing down lead­ing to more af­ford­abil­ity and con­trac­tion of rev­enue growth in this sec­tor.

Ac­cord­ing to DQ es­ti­mates the India ex­ter­nal stor­age mar­ket stood at ` 2,278 crore in FY 17 as against

` 2,100 crore the pre­vi­ous year. This sig­ni­fies a growth of 8%. Let’s look at what mar­ket re­search firms like IDC has to say.

MAR­KET DY­NAM­ICS FY 17

IDC says that spend­ing from telecom­mu­ni­ca­tion ver­ti­cal drove the Ex­ter­nal Stor­age Mar­ket Growth(YoY) in

Q1 CY 2017. Ac­cord­ing to IDC’s lat­est Asia/Pa­cific Quar­terly En­ter­prise Stor­age Tracker, Q1 2017, India’s ex­ter­nal stor­age mar­ket wit­nessed a growth of 13.8% year on year (YoY) (in ven­dor Rev­enue) and stood at $74.6 mil­lion in Q1 2017. Mul­ti­mil­lion­dol­lar deal in telecom­mu­ni­ca­tion ver­ti­cal drove this growth in the ex­ter­nal stor­age mar­ket. Bank­ing, tele­com, pro­fes­sional ser­vices, man­u­fac­tur­ing and gov­ern­ment con­tin­ued to be the key con­trib­u­tors in Q1 2017.

In ad­di­tion to the ma­jor ver­ti­cals, sig­nif­i­cant growth is wit­nessed in ver­ti­cals such as Se­cu­rity, Trans­porta­tion, and In­sur­ance dur­ing this pe­riod.

Dileep Nadim­palli, As­so­ciate Re­search Man­ager, En­ter­prise In­fra­struc­ture says, “Ex­ter­nal Stor­age is get­ting very dy­namic to ad­dress new age de­mands from emerg­ing tech­nolo­gies such as real-time busi­ness ana- lyt­ics, In­ter­net of Things, Aug­mented re­al­ity, ro­bot­ics, etc. Flash stor­age, Hy­per-con­verged in­fra­struc­ture and Soft­ware-de­fined stor­age tech­nolo­gies are get­ting more rel­e­vant across or­ga­ni­za­tions like never be­fore.”

High-end stor­age seg­ment wit­nessed a strong YoY growth in Q1 2017 due to large de­ploy­ments from telecom­mu­ni­ca­tions, bank­ing and gov­ern­ment ver­ti­cals. En­try-level stor­age saw a mar­ginal growth while mid-range ex­ter­nal stor­age saw a mar­ginal YoY de­cline in mar­ket share dur­ing Q1 2017.

Wit­nessed sig­nif­i­cant up­take of All flash Ar­rays (AFA) among tele­com, BFSI, IT/ITeS, gov­ern­ment, and man­u­fac­tur­ing units in Q1 2017.Ac­cep­tance of AFA is in­creased as it of­fers bet­ter per­for­mance at an af­ford­able price. Also, wit­nessed in­creased ac­cep­tance of Hy­brid Flash ar­rays (HFA) as this of­fers both ca­pac­ity and per­for­mance with a sin­gle ar­ray.

Mod­ern­ize IT in­fra­struc­ture and re­duce in­fra­struc­ture foot­print are the key IT pri­or­i­ties across or­ga­ni­za­tions. Tech­nolo­gies such as Hyper­con­verged in­fra­struc­ture and Soft­ware-de­fined Stor­age are gain­ing trac­tion to ad­dress both op­ti­miza­tion de­mands and re­move in­fra­struc­ture man­age­ment com­plex­i­ties.

Ac­cord­ing to Shary­athi Nagesh, Se­nior Re­search Man­ager, En­ter­prise In­fra­struc­ture says, “Im­ple­men­ta­tion of GST is ex­pected to have a neg­a­tive im­pact on en­ter­prise IT for the next 2 quar­ters. In long term, ex­ter­nal Stor­age will be im­pacted by growth in in­ter­nal and ODM stor­age. Pri­mar­ily driven by tech­nol­ogy trends, like SDS and HCI, and wider ac­cep­tance of pub­lic cloud. In this chal­leng­ing en­vi­ron­ment tak­ing a so­lu­tions-cen­tric ap­proach, rather than a prod­uct-cen­tric ap­proach, with the right tech­nol­ogy part­ner­ships will

New tech­nolo­gies such as hy­per con­verged in­fra­struc­ture might can­ni­balise tra­di­tional midrange stor­age busi­ness in the­n­ear fu­ture

help ex­ter­nal stor­age sup­pli­ers stay ahead in their game.”

Dell Inc con­tin­ued to lead the mar­ket with mar­ket share of 43.4% fol­lowed by HPE in Q1 2017. IBM and Ne­tapp wit­nessed a sig­nif­i­cant YoY growth due to up­take from bank­ing, tele­com and gov­ern­ment ver­ti­cals in Q1 2017.

As we look at Q4 CY 16, the growth was pri­mar­ily driven by BFS. Go­ing by IDC it says that “Bank­ing, pro­fes­sional ser­vices, man­u­fac­tur­ing, and gov­ern­ment con­tin­ued to be the key con­trib­u­tors in Q4 2016. Large bank­ing re­fresh deals drove the stor­age mar­ket and ex­pect­ing in­creased spend­ing from bank­ing on an­a­lyt­ics and UPI plat­forms in the com­ing quar­ters. In ad­di­tion to the ma­jor ver­ti­cals, sig­nif­i­cant growth is wit­nessed in ver­ti­cals such as Se­cu­ri­ties, Trans­porta­tion, Ed­u­ca­tion and In­sur­ance which drove in­cre­men­tal stor­age rev­enues in Q4 2016.”

IDC fur­ther states that mid-range ex­ter­nal stor­age seg­ment con­tin­ued to lead the mar­ket with more than 50% mar­ket share in Q4 2016. In­creased mar­ket ac­cep­tance of new tech­nolo­gies such as hy­per con­verged in­fra­struc­ture might can­ni­bal­ize tra­di­tional mid-range stor­age busi­ness in the near fu­ture. High-end stor­age seg­ment wit­nessed a sig­nif­i­cant quar­ter on quar­ter growth as com­pared to other seg­ments in Q4 2016 due to large re­fresh deals from bank­ing and tele­com ver­ti­cals.

There was sig­nif­i­cant year on year growth of All Flash Ar­rays (AFA) due to up­take from bank­ing, IT/ITeS and man­u­fac­tur­ing ver­ti­cals in Q4 2016. Or­ga­ni­za­tions are will­ing to pay a lit­tle ex­tra to avail best in class per­for­mance, so opt­ing flash stor­age tech­nolo­gies like never be­fore.

With the in­creased ac­cep­tance of SMAC tech­nolo­gies across or­ga­ni­za­tions, stor­age de­mands from end- cus­tomers are chang­ing to ac­com­mo­date these new age work­loads. In­creas­ing de­mand for cloud stor­age as a ser­vice is clearly vis­i­ble in the mar­ket. This trend would drive ad­di­tional stor­age de­mand from 3rd party dat­a­cen­ter play­ers and cloud providers, how­ever, these play­ers started con­sid­er­ing com­po­nent man­u­fac­tures or white-box play­ers.

OUT­LOOK

Ac­cord­ing to IDC the ex­ter­nal en­ter­prise stor­age sys­tems mar­ket is ex­pected to grow in sin­gle digit in terms of com­pound an­nual growth rate (CAGR) for 2016 – 2021 timepe­riod. Ex­pect­ing in­creased stor­age spend­ing from bank­ing on an­a­lyt­ics plat­forms and United Pay­ment In­ter­face to ac­com­mo­date in­creased dig­i­tal trans­ac­tions. Also, ex­pect­ing very large state sur­veil­lance projects and smart city projects to get closed in the next cou­ple of quar­ters.

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