Enterprises finally started opening their pocketbooks for external storage systems in the final quarter of last year, but economic uncertainty and the appeal of public cloud services continue to hold back the market, according to research company Gartner.
Revenue from external controller-based storage, which includes both hard-drive and flash arrays but not components for unique platforms such as the Amazon Web Services, Microsoft Azure and Google clouds, rose to $6.3 billion worldwide in the fourth quarter. That was up 5 percent from a year earlier, but it came at the end of a dismal year for the industry, Gartner said.
Buyers held back on buying storage systems for most of the year because some economies remained fragile, especially in Europe, analyst Roger Cox said. The shutdown of the U.S. government in the third quarter also cut into sales, he said. At the same time, some enterprises are avoiding purchases of controller-based storage systems altogether, turning instead to service providers such as Amazon and Microsoft that offer storage through cloud-based services. Gartner doesn't include the pure disk capacity that these so-called webscale companies buy in its controller-based storage results.
Such services are becoming increasingly acceptable as alternatives to premises-based storage, Cox said. Though enterprises are still fast accumulating data, spending growth won't return to the double-digit rates of a few years ago, he said.
"When we look more and more out into the future, it's the impact of these webscale public clouds," Cox said.
The result of all those factors was a weak 1.4 percent revenue growth for the full year, to $22.5 billion. This year, Gartner expects the market to speed up but still remain at a relatively slow 3 percent growth. The rebound in last year's fourth quarter came partly from pent-up demand and so-called budget flushing, or spending what's left in an organization's annual budget.
Hewlett-Packard was the biggest gainer in the fourth quarter, logging a revenue boost of 25.3 percent from a year earlier and taking 9.6 percent of the market, up from 8 percent a year earlier. EMC also gained, and it remained the biggest vendor, growing to 36 percent of the market, Gartner said. Dell saw its revenue fall 14.4 percent and lost market share. Dell's controller-based storage gear declined, apart from its Compellent line, and sales may also have been hurt by organizational issues caused by the leveraged buyout of the company last year, Cox said.
Research company IDC reached similar conclusions earlier this month through a slightly different way of measuring sales. It found 2.4 percent growth in the fourth quarter and a 0.3 percent decline for the year as a whole. Economic woes and the U.S. government shutdown contributed to that drop, but revenue growth is slowing down long term, said IDC analyst Eric Sheppard.
The good news is that enterprises are spending less on storage systems because they are storing their fast-growing volumes of data more efficiently, Sheppard said. Technologies such as data deduplication, thin provisioning, storage tiering and the use of flash in the place of high-speed spinning disks all are helping to hold down new purchases of capacity, he said.