The decline and fall of the enterprise array, is the gate opening wider for SDS?

Here’s a few hard facts about the enterprise storage market from the bellwether of market share, IDC’s Worldwide Quarterly Enterprise Storage Systems Tracker:

• The value of global storage sales is down to $8.2bn, a YoY decline of 7%
• ODM (Original Designing Manufacturer) sales to hyperscale environments is down a staggering 39% £681m.
• Server based storage is up 2% to £2.1bn.
• External storage – arrays – is the biggest segment at $5.4bn but fell 3.7% – a long term trend.

You can see the stats on who are the top dogs in enterprise storage here but suffice to say, Dell’s acquisition of EMC will safely see them to the top of the heap, of what is without question, a diminishing market, even if it is – currently at least – massive. King of the Hill, only the Hill seems to have a serious problem with soil erosion.

‘the enterprise storage system market reverted to a familiar trend,” said Liz Conner, IDC’s research manager for storage systems. “Spending on server-based storage was up, spending on traditional external arrays continues to decline’. The same analyst organisation reports elsewhere that worldwide data growth over the next four years to 2020 is going to be a staggering 40% EVERY YEAR and will reach 44 zettabytes as the Internet of Things powers growth. Square that up.

IDC is talking about the entire digital universe, which includes the memory on your cellphone and potentially at some point your connected fridge – but we all know an awful lot of data from connected devices is going to end up backed up on and travelling across hyperscale environments, so why are array sales in hyperscale environments slumping when logic dictates demand is rising and sales should be soaring?

Let’s unpick those numbers a bit: just where is all this soil erosion coming from, and what does it mean for the big array makers?

• The big players are engaged in a price war, and cost per GB stored is on a steep downward trend. It’s a race to the bottom.
• The big guys are consolidating – with the acquisition of EMC, Dell will account for more than a quarter of the market, and the Big Three – Dell, HP Enterprise and NetApp, will own half of the market. It’s a Lockdown showdown.
• Enterprises prefer server based storage, which is growing while arrays tank
• Hyperscalers don’t like any of the big boys and despite seeing the biggest storage growth rates on the planet, they cut back by 39%.

The big players are in full on ‘get big or get out’ mode: buying up competitors so they ‘own’ as big as possible a chunk of the customer base, and face less price competition. For enterprises this means there will be less choice about who they can buy from, and more vendor lockdown. The trend is exacerbated by the hyperscalers: the organisations with the biggest storage footprint on the planet and the biggest storage growth are cutting back on arrays, and not by a little, but by a savage 39%.

I don’t think – should they come back on the market – that I’d be in a rush to buy Dell shares. But, if you showed me a company with a platform that can help Enterprises get out of the coming lockdown showdown, cut their storage prices still further, interoperate with Cloud, work in heterogeneous environments, support Block, Object and File and give enterprises their preferred long term strategy of server based storage on commodity and cheaper x86, I think I might talk to my broker. ‘You would say that’ I hear you say ‘you work for SUSE’. Yeah I do. Nevertheless.