Pure-Play Vendors Rule The Storage Roost

With the amount of data to be stored growing at 50 percent-plus per year, it's no surprise that storage vendors are selling a lot more storage. According to Gartner, the worldwide external controller-based (ECB) disk storage market surpassed $19.4 billion in 2010, an 18.1 percent increase from 2009 revenue and beating the previous high set in 2008 by $1.4 billion. What may come as a surprise is that EMC increased its market lead by 3 points and NetApp jumped from sixth to third spot among the top vendors.

What that tells Pushan Rinnen, a Gartner storage analyst, is that despite the best efforts of the server vendors, the pure-play storage vendors are still the preferred choice. "Lots of users are still trying to buy the best-of-breed products from NetApp and EMC, and not from the server vendors like IBM and HP [or Dell and Oracle/Sun]."

In addition to the growth in data, Gartner attributes the strong results to storage infrastructure modernization, expanded server and desktop virtualization projects, disk-based backup and archiving deployments, new file-oriented applications, and cloud-based service offerings. The company says customers are showing a willingness to invest in new and modern ECB disk storage solutions that address complexity, reduce operating expenses, and improve utilization while satisfying demanding service-level agreements.

EMC took top spot with 28 percent of 2010 ECB disk storage revenue, and 28.2 percent in the fourth quarter. NetApp delivered the best performance, increasing revenue 50.9 percent from 2009. IBM held down second place, with HP in fourth, followed by HDS, Dell, Oracle/Sun and Fujitsu. Oracle was the only top-eight vendor to lose market share, dropping from 4 percent in 2009 to 2.5 percent last year. Collectively, the top six vendors accounted for more than 80 percent of revenues.

IDC's take the on the market was similar to Gartner's although it put NetApp and HP in a virtual tie for third place with an 11.1 percent share, followed by Dell in fifth place with a 9.1 percent share.Acquisitions had a lot to do with EMC's growth, says Rinnen, with its Data Domain and Isilon additions "growing like gangbusters." As for NetApp, she says, it is the main source for unified storage--both block and file--and continues to execute well. Gartner reports that while block-access ECB disk storage continued to dominate the market, with 80 percent share and year-over-year growth of 14.9 percent, file-access disk grew 36.2 percent from 2009.

There are several reasons for Oracle's decline, says Rinnen, including the cancellation of the HDS relationship, leaving the company without a high-end offering. The other major change, focusing on integrating Oracle software with Sun hardware, means that the vendor is missing out on opportunities based on Microsoft and VMware software. Combine the two, and it's no surprise that Oracle's share is declining, she says.

Acquisitions fueled a lot of the market share changes, including Oracle's, which went from no storage offerings to the world's seventh largest external disk vendor, but there aren't a lot more big deals to be had, says Rinnen. This week's announcement that NetApp is paying LSI $480 million for its Engenio external storage business just illustrates that, she says. LSI typically sells through OEMs, with the biggest being IBM, which is already a NetApp OEM. She expects the IBM relationship to continue over the short term, but adds that IBM is developing its own midrange storage portfolio, which puts its long-term outlook in doubt.

NetApp will also be able to address some new vertical markets, such as media streaming, as well as go after LSI's installed base. However, Rinnen says, it will have to invest more R&D into the Engenio line because it hasn't had a lot of innovation in the last couple of years. Other than this, most of the attractive storage vendors have already been acquired, she says. "There are just not a lot of companies out there that really stand out."

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