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Press Release

All-flash NVMe-drive based storage arrays take off, while external storage unit shipments rise 9 percent sequentially in Q2

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Global revenue in the server external storage market declined by 4 percent year-over-year (YoY) in the second quarter, while unit shipments dropped by 10 percent, reflecting another weak quarter compared to the robust results of 2018. 

With two quarters left in 2019, the market is expected to contract by 1.5 percent for the entire year—a massive downswing from 25 percent growth in 2018, according to the Data Center Storage Equipment Market Tracker from IHS Markit | Technology, now a part of Informa Tech.

On a quarter-over-quarter (QoQ) basis, storage revenue in the second quarter rose 3 percent, while units increased 9 percent. However, these increases reflected normal seasonal patterns, and didn’t represent a strong rebound from weak conditions in the first quarter.

All-flash array storage decreased QoQ, but all-flash NVMe-drive based versions rose

In the overall all-flash array storage sector, revenue decreased by 1.7 percent QoQ, while the YoY revenue increased 21 percent in the second quarter. The all-flash array sector is comprised of all flash performance and performance-optimized arrays.

In all flash performance arrays, which is the larger category based on SAS drives, revenue fell. For performance-optimized arrays, a new category based on flash NVMe drives, revenue rose during the quarter.

“Adoption of NVMe solid-state drives in all-flash arrays is starting to ramp up, and the use of NVMe inside arrays will continue at a surprisingly strong pace,” said Dennis Hahn, principal analyst at IHS Markit | Technology.

 

© 2019 Informa Tech LLC.

Global revenue for data-center storage will increase to $62 billion in 2023, up from $40 billion in 2019, representing a compound annual growth rate (CAGR) of 9 percent.

While the forecast for the next few quarters still leaves 2019 short of 2018, the long-term outlook for the market remains strong. The demand for data storage will continue to grow, thanks to the continuous proliferation of digital data and data-intensive workloads such as the internet of things, video streaming, industrial automation and artificial intelligence.

In the second quarter, shipments of all flash performance array units were flat compared to the first quarter. This flatness indicates that several of the all-flash leaders struggled to expand shipments in the second quarter. NetApp, for one, was down 2 points in overall storage market share in the second quarter of 2019, after reporting a 24 percent YoY drop in all-flash company revenue in the second quarter. 

In 2018, the data-center storage business undertook a broad transition away from high-performance spinning-disk technology and toward all-flash storage to achieve vastly increased storage workload performance. The much higher average selling prices (ASPs) associated with all-flash storage are causing revenues to grow more strongly than units in 2019. However, these same higher ASPs also translate into major capital expense investments, which caused large enterprise to pause their buying in the second quarter, especially in high-end arrays. In the long run, as flash pricing continues to decline, we expect the transition to all-flash will continue for at least the next year.

Additional data center storage highlights

  • Total server external data center storage will reach $62 billion by 2023, up from $40 billion in 2018, with a five-year CAGR of 9 percent.
  • Revenue for the all flash performance array category grew 1.8 percent YoY in the second quarter, while hybrid performance arrays declined 4.8 percent YoY, and capacity-optimized arrays declined 21.6 percent YoY.
  • Dell EMC maintained its market revenue leadership for array storage, with a 29 percent share in the second quarter. White box vendors took the No. 2 spot with a 22 percent share. HPE swapped places with NetApp, giving HPE took the No. 3 spot with 7 percent share.
  • IHS Markit | Technology expects white-box vendors to reach a 30.5 percent revenue share in 2023, up from 27 percent in 2019, with Open Compute Project-certified products set to increase to a 10 percent share and traditional storage to drop to a 59 percent share in 2023.
  • We forecast cloud service provider (CSP) revenue share growth will moderate, but still will account for a 43 percent share in 2023, with telco service providers ramping to a 12 percent share and enterprise dropping to 45 percent.

About this Data Center Storage Equipment report

With forecasts through 2023, the Data Center Storage Equipment Market Tracker from IHS Markit | Technology provides quarterly worldwide and regional market size, vendor market share, and other analysis and trends, including white-box storage demand, cloud-service-provider shipments and significant announcements for data-center external storage. Vendors tracked include Dell EMC, NetApp, HPE, IBM, Huawei, Lenovo, Pure Storage, Hitachi and others.

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