IDC: High-End SAN Revs Up

High-end storage systems made a comeback last quarter, stealing a march on the midrange, according to IDC.

According to the research firm, total worldwide revenue from high-end systems (those priced $300,000 and up) increased to $1.13 billion in the second quarter, up from $1.09 billion in the first (see IDC: Disk Storage Soars). Revenue from midrange systems ($50,000 to $300,000) tailed off from $1.49 billion in the first quarter to $1.41 billion in the second.

High-end systems had been in a tailspin, with two straight quarters of year-over-year declines, but during the second quarter that figure rose 8 percent. Midrange revenue increased 19 percent year-over-year, despite the dip from the first to the second quarter (see Midrange Makes Its Move).

IDC attributes the change to new products from Hewlett-Packard Co. (NYSE: HPQ) and Sun Microsystems Inc. (Nasdaq: SUNW). Both sell the Hitachi Data Systems (HDS) TagmaStore system through OEM deals (see Hitachi Struts Mr. Universal).

The midrange is still the sweet spot, but this quarter had some rebound in the high end, largely due to HP and Sun selling larger systems,” says IDC analyst Brad Nisbet.Also claiming strong enterprise sales is IBM Corp. (NYSE: IBM). Last quarter brought the first volume sales of its DS8000 enterprise system (see IBM's New Shark Tale and IBM Denies Slipped Ship Date).

All this points away from storage vendors’ heavy concentration on the SMB market. This past quarter, systems priced under $50,000 accounted for $1.28 billion in revenue -- the same as last year, and barely up from $1.22 billion in the first quarter. And not all those systems are selling into SMBs. They also include smaller systems bought by large companies.

“I would not label the influx of networked storage into SMBs assignificant -- yet,” Nisbet says. “We are at the very beginning stages of what we believe will grow to be a significant portion of the market.”

Overall, it was a strong quarter for disk storage products, especially SANs. The total worldwide disk storage systems market increased 9.9 percent year-over-year to $5.6 billion, marking the highest year-over-year growth in eight quarters.

External disk storage (SAN, NAS, and direct attached) increased 8.6 percent to $3.8 billion, and networked storage (SAN and NAS) grew 16.1 percent from last year to $2.489 billion. SANs increased 17.8 percent from last year, while NAS grew 9.5 percent.On the vendor front, EMC Corp.’s (NYSE: EMC) grip on the network storage lead loosened a bit, as HP nearly pulled even in SAN revenue. EMC maintained its lead in the SAN and NAS markets, and Dell Computer Corp. (Nasdaq: DELL) posted large year-over-year gains mostly by reselling EMC systems. But HP, IBM, and Network Appliance Inc. (Nasdaq: NTAP) are picking up SAN market share. Let's take a closer look.

SAN
HP erased nearly all of EMC’s lead in SAN sales from last quarter. EMC dropped from 26.7 percent market share to 25 percent, while HP surged from 23.9 percent to 24.8 percent. EMC likely got hurt by its competitors’ new high-end systems hitting the market months before it upgraded its Symmetrix enterprise system. EMC started shipping its new system this week (see EMC Swells Its High End and EMC Ships DMX-3).

Third-place IBM grew 23 percent year-over-year and lifted its market share to 14.3 percent -- up from 13.7 percent a year ago and 11.5 percent in the first quarter. Dell grew 46.5 percent from last year, pulling ahead of Hitachi into fourth place with 8.3 percent market share. Hitachi’s 7.2 percent market share fell from 9.1 percent last quarter. Those figures include Hitachi’s branded sales, and not the Hitachi systems sold by HP and Sun.

Sixth-place Sun continued its storage decline. It was the only SAN vendor among the top 10 to lose revenue since last year, falling 3.2 percent. Sun’s market share dropped to 6.9 percent, down from 8.4 percent a year ago.

Nisbet says Sun did well selling enterprise systems, but midrange sales were down. Sun hopes to fix its storage problem with its $4.1 billion acquisition of StorageTek that closed this week (see Sun Sets on StorageTek and Sun to Acquire StorageTek for $4.1B). Unfortunately for Sun, StorgeTek didn’t crack the top 10 disk vendors.Table 1: Worldwide SAN Revenue (including iSCSI)

NAS
EMC retained its NAS lead with 40.2 percent market share, followed by Network Appliance at 35.2 percent. Both increased share from the first quarter, when EMC had 37.9 percent and NetApp 34.2 percent. Over the last year, EMC has increased revenue 16.9 percent compared to 6.5 percent for NetApp -- but that’s likely a result of IDC starting to lump content-addressed storage (CAS) in with NAS in the first quarter of 2005. EMC was first to market with CAS and has a strong leadership position.

Table 2: Worldwide NAS Revenue

iSCSI
NetApp held its lead in the small but growing iSCSI market, which increased 140 percent year-over-year. NetApp had a 41.6 market share, followed by EMC at 26 percent. Both lost market share from last quarter, suggesting vendors that concentrate on iSCSI only are making gains, such as EqualLogic Inc., Intransa Inc., and LeftHand Networks Inc. (see EqualLogic Hits 500 Mark ).

— Dave Raffo, Senior Editor, Byte and Switch0