IDC: SANs Gather Steam

Market researcher says Dell and IBM have picked up market share, but EMC rules

December 6, 2003

4 Min Read
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EMC Corp. (NYSE: EMC) kept its lead in the networking storage market in the third quarter and helped its partner Dell Computer Corp. (Nasdaq: DELL) grow impressively, according to IDCs latest quarterly report on the sector, released today.

The IDC numbers show networked storage (open SAN and NAS) continuing to expand compared to the overall storage market. SAN is also widening its dominance over NAS.

Overall, networked storage revenues improved 12.3 percent year over year, while the overall worldwide disk storage market slipped 0.3 percent. Open SAN gear, defined by IDC as Fibre Channel and iSCSI products, picked up 15.7 percent over 2002, compared to 1.2 percent growth for NAS. Worldwide Open SAN revenues hit $1.4 billion, compared to NAS revenues of $369 million.

Networked storage totaled 37.5 percent of the $4.8 billion total worldwide disk storage system market in the third quarter, up from 32 percent a year ago.

Dell and IBM Corp. (NYSE: IBM) recorded the best year-over-year revenue growth in networked storage -- 55.4 percent and 33.8 percent, respectively. Notably, though, all of their growth came in the SAN space, while their revenues dropped on the NAS side.Dell grew a whopping 81.5 percent in the lucrative open SAN market. While still fifth behind Hewlett-Packard Co. (NYSE: HPQ), EMC, IBM, and Hitachi Data Systems (HDS), Dell had 7.2 percent of the open SAN market in the quarter -- up from 4.6 percent last year.

HP led the open SAN category with a 31.2 percent of market revenue after growing 18 percent over last year (see HP Midrange Storage Impresses). EMC had 27.1 percent of the SAN market, and IBM was third with 14.5 percent of the market after growing 37.2 percent.

Figure 1:

When SAN and NAS revenues were combined, EMC came out on top, with 28.9 percent market share. HP held second with 25.6 percent of the market and IBM third with 11.5 percent. EMC, HP, IBM, Network Appliance Inc. (Nasdaq: NTAP), and Dell all gained market share from the third quarter in 2002.

Dell's success in SANs seems due to its partnership with EMC. Dell and EMC co-brand storage arrays, including the SAN Clariion and Symmetrix systems (see Dell, EMC Talk Turkey). “It was a real good quarter for Dell,” says IDC analyst John McArthur, “and Dell’s growth was very much due to EMC.”David Goulden, EMC's executive vice president for global marketing and new business development, agreed: “It’s clear that EMC and Dell are the fastest-growing players in the disk storage systems market, and this demonstrates what happens when the best technology is delivered to customers by the best sales and distribution forces in the industry."

HP led the open SAN category with a 31.2 percent of market revenue after growing 18 percent over last year (see HP Midrange Storage Impresses). EMC had 27.1 percent of the SAN market, and IBM was third with 14.5 percent of the market after growing 37.2 percent.

IBM sees EMC as its chief enemy, and it's bent on overcoming it (see IBM Attacks EMC Customer Base). “We are getting our boxes into EMC shops and have established a stronghold in the high-end space," says Roland Hagan, IBM’s VP of storage systems. Still, IDC's numbers indicate IBM is taking more revenue from players smaller than EMC. IDC shows “other suppliers” -- all except HP, EMC, IBM, Hitachi, Dell, Sun, and NetApp -- dropped 28.8 percent in the Open SAN space. HP, EMC, and IBM controlled 72.8 percent of that market, up from 68.7 percent last year.

In the NAS market, NetApp ruled in 2003, even though EMC gained on it. NetApp took $236 million in NAS revenues, a 37 percent market share, compared with EMC's $130 million, a market share of 35.4 percent. Still, EMC grew its share 17.2 percent year over year, while NetApp fell 0.4 percent.

Indeed, 2003 wasn't a good year for NAS. EMC, Hitachi, and HP grew from last year in the NAS market, with the rest of the market slipping considerably. HP grew 21.8 percent, from $15 million to $19 million, in NAS revenues. Hitachi nearly doubled its NAS sales, hitting $6 million for 1.5 percent of the market -- growth of 94 percent. Hitachi didn’t do as well in open SANs, slipping 3.3 percent from last year.Sun (down 3.4 percent) and Hitachi (down 0.8 percent) were the losers among the major players in network storage. They were also the only two majors to decrease in open SAN revenue from a year ago.

— Dave Raffo, Senior Editor, Byte and Switch

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