Hyper-converged and all-flash shine against backdrop of declining storage revenues

Writing about the rise of hyper-converged infrastructure yesterday, and its likely impact on entry-level storage arrays, I based my blog-ument entirely on anecdotal evidence. IE, simply what I see coming across my desk as a storage editor in terms of product news and customer wins.

So, I decided to look back through this year’s IDC storage figures, and while I couldn’t find numbers to precisely back up my case, I did find strong evidence that hyper-converged is riding a real wave right now, among other things.

Highlights of IDC’s Q1 year-on-year figures (admittedly Q1 has its own peculiarities, but at least like and like are being compared) included:

* Sales of hyper-converged storage increased 148% year-on-year.
* Enterprise storage as a whole and storage array revenues are on the decline.
* That decline was exacerbated in the period reviewed because of the volatility of hardware sales into web hyperscale datacentres, according to IDC.
* Converged systems, including the likes of vBlocks and FlexPods, as well as hyper-converged are on the rise, with revenues up 11% over the year.
* All-flash is undergoing a meteoric rise, with market share up 87% on the year before.
* But hybrid flash – with 40% market share – dwarfs all-flash’s 14%.
* And still, flash storage revenues account for less than 50% of total storage, so there’s still a lot of disk getting shifted.

Here are the longer versions of that.

The enterprise storage market – including external storage systems and server-based (ie, hyperscale) – declined in terms of revenue and capacity year-on-year in the first quarter of 2016. Total revenues fell 7% from $8.828 billion to $8.211 billion. Total capacity shipped dropped by 4%.

When it comes to “traditional” arrays – ie, the external storage market – revenues fell from $5.631 billion to $5.423 billion (a 3.7% drop) between 1Q 2015 and the same period this year.

In terms of market share ranking the order is EMC (25%), NetApp (12%), HPE and Hitachi Data Systems (9% – 10%) tied in third with Dell and IBM tied after that (7% – 8%).

That’s all going to change now, of course, with Dell-EMC in a seemingly unassailable position for now upon the close that acquisition.

Why did overall enterprise storage systems revenue drop more than that of external arrays? That’s down to a big decline in sales by ODM’s (original design manufacturers) that supply hardware to hyperscale datacentres, says IDC. That segment registered a 40% fall in revenue over the period.

IDC characterises the hyperscale market as “fluctuat[ing] heavily”. Presumably that’s a feature of the elastic, cloud-y nature of webscale operations, and a good thing for those customers, who drop hardware in and out as demand changes.

But what of all-flash and hybrid flash?

All-flash saw a meteoric increase in market share, up 87% on the previous year’s Q1, but makes up only 14% ($795 million) of the external storage market. Meanwhile hybrid flash revenues are 40% of the total.

The top five vendors in all-flash are different to that of external storage systems overall. EMC is top (31%) with NetApp second (23%). Third is Pure Storage (19%), with HPE (12.5%) and IBM (8.5%) fifth and sixth.

The stellar performer in all-flash was NetApp, which grew revenue 238% year-on-year and moved from fourth to second place in the table. That’s pretty much down to NetApp’s acquisition of all-flash specialist SolidFire in December 2015.

While overall storage systems and external arrays haveseen declines, converged systems increased revenues by 11% to $2.5 billion year-on-year to the end of Q1. These include integrated systems from the same vendor and certified systems from different vendors, such as the VCE products (EMC, Cisco) and FlexPod (NetApp, Cisco).

Also included are hyper-converged infrastructure products, and these saw an incredible sales growth over the year, at 148% year-on-year to $372 million. This was just under 15% of total converged products market value.