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
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.
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.