IDC: Second-Quarter Storage Sales Slump As Capacity Booms

The storage industry appears to be heading toward a slump as year-over-year revenue slipped for the second quarter in a row, according to the latest IDC quarterly report.

Bucking the overall downward trend are storage-focused vendors, including EMC and NetApp, both of which enjoyed strong revenue growth for the second quarter of 2013, IDC reported. However, storage sales by systems vendors, as well as by traditional storage-focused Hitachi, fell year-over-year to drag overall sales down despite a huge jump in capacity sold.

Analyst firm IDC on Friday said second-quarter 2013 worldwide external disk storage systems factory revenues fell year-over-year by 0.8 percent to just over $5.9 billion. Total disk storage systems sales, which includes both external storage and internal storage sold as part of a server, fell 5.0 percent to about $7.7 billion.

[Related: Behind The Numbers: Analyzing Gartner's Q2 Server Estimates ]

However, IDC reported, total storage capacity shipped grew 21.5 percent over last year to reach 8.2 exabytes.

The high growth in storage capacity combined with a drop in revenue was no surprise to one solution provider.

That solution provider, a Dell partner who asked to remain anonymous, said that customers are keeping their data longer and, therefore, moving more of that data to disk as it ages.

"Unless it's a new customer, 80 percent of our orders are capacity-based orders," the solution provider said. "They're buying slower 7,200-rpm high-capacity drives. It's what we've seen with our Dell Compellent sales. If we size the I/O correctly, future upgrades tend to be for the slower-capacity tiers."

The solution provider said it is important to do an application analysis to help design storage solutions with a performance tier and then plenty of large-capacity drives. "But if customers buy storage for a few applications and then add more applications, they will be adding more performance drives," the solution provider said.

No matter how storage sales were measured, EMC kept its traditional top spot with sales in the second quarter of $1.9 billion, up 2.1 percent over the same period as last year. That gave EMC a 31.3 percent share of the external storage market.

EMC's growth did not surprise that solution provider, who often competes against the vendor with Dell solutions.

NEXT: EMC's 'Aggressive' Sales Team Leads The Charge

EMC has a much better sales team than all the other storage providers, the solution provider said.

"EMC's sales team is very aggressive," the solution provider said. "They refuse to lose. I've seen guys at Dell take vacations at the end of the quarter. You'd get fired at EMC if you did that."

NetApp was the only other top-tier storage vendor to show growth during the quarter, with sales up 8.6 percent to $789 million. That was enough for it to squeak past IBM to take the No. 2 position in the external storage market, and got it into the top five in terms of total external and external storage sales, IDC reported.

IBM was the No. 3 worldwide external storage sales vendor with sales of $747 million, down 3.0 percent. It was followed by Hewlett-Packard, with sales of $594 million, down 7.5 percent; Dell at $454 million, down 3.1 percent; and Hitachi and its Hitachi Data Systems sister company at $424 million, down a huge 12.4 percent.

The fall in Hitachi and HDS sales was surprising given how the company has traditionally had one of the stronger storage sales growths. HDS did not respond to a request for more information about its storage sales.

Second-quarter 2013 server sales had a huge impact on total disk storage systems sales, including external and internal storage, for the quarter.

HP, which according to Gartner shipped 13.6 percent fewer servers in the second quarter than the same period last year, saw its total storage sales plummet 16.5 percent to $1.3 billion. That, however, was enough to maintain HP's second place in the market.

As if that weren't bad enough, IBM saw its total storage sales fall 17.1 percent to $1.0 billion, thanks to an 8 percent drop in server sales.

Of all the server vendors, only Dell enjoyed overall storage growth for the second quarter. The company's total storage sales grew 4.8 percent to $968 million on the strength of its server shipments, which Gartner estimated grew 1.7 percent over last year. That was enough to give Dell a fourth-place showing, just ahead of fifth-place NetApp.

IDC also reported that sales of open networked disk storage solutions, including NAS and non-mainframe SAN, grew an anemic 0.2 percent during the second quarter to $5.2 billion. EMC was the leader in this part of the market with a 34.1 percent share, followed by NetApp with a 15.2 percent share.

Open SAN sales fell 0.6 percent over last year, while NAS sales increased 2.5 percent, IDC reported. EMC was the leader in both parts of the market, followed by IBM in the open SAN market and by NetApp in the NAS market.

PUBLISHED SEPT. 10, 2013