Flash Storage Thrives as Server Sales Slump
New data points emerged this week indicating that all-flash storage arrays are beginning to make headway in datacenters as server sales continue to decline.
Market researcher Dell'Oro Group reported that all-flash array market revenue grew a healthy 48 percent on an annual basis during the first quarter to more than $1.3 billion. All-flash arrays were the only market segment to register growth over the last year as the external storage market continues to contract, the analyst said Wednesday (June 7).
Dell'Oro is forecasting that revenues from all-flash arrays will grow at an annual rate of 40 percent this year to nearly $7 billion. By contrast, disk-based and hybrid storage options are expected to decline by about 14 percent, according to Dell'Oro's Jimmy Yu.
The top five vendors of all-flash array storage in terms market share were: Dell EMC (29 percent); NetApp (21 percent); Hewlett Packard Enterprise (17 percent); Pure Storage (12 percent); and IBM (7 percent).
While Dell EMC (NYSE:DVMT) maintained the highest share of the flash market, Yu said NetApp (NASDAQ:NTAP) actually gained the most market share during the first quarter, with a 6-percent increase from the same period in 2016.
"The growth trend in flash storage is bringing disruption to traditional storage systems" that collectively make up a $40 billion global storage market, Dell'Oro noted.
As datacenter infrastructure is converged and more enterprises shift to public and private cloud datacenters, the market analyst noted that enterprise hybrid cloud strategies bring with them new storage requirements. Hence, "equipment vendors are facing challenges to their traditional product lines and feature sets," it added.
Those vendors have acknowledged as much as they look to position themselves to equip all-flash datacenters. Hewlett Packard Enterprise (NYSE: HPE) executives, for example, noted last week that all-flash arrays have yet to make significant headway in datacenters, and that its recent acquisition of "predictive flash" specialist Nimble Storage would help boost its flash revenues.
HPE, Dell EMC and other vendors are focusing on flash storage in datacenters as the enterprise shift to the cloud contributes to declining server sales.
Meanwhile, Gartner Inc. (NYSE: IT) also reported this week that global server shipments declined another 4.2 percent during the first quarter while quarterly revenues dropped by 4.5 percent. HPE saw its quarterly revenue plummet 8.7 percent while IBM's plunged 34.6 percent.
Only Dell EMC among leading server vendors recorded quarterly revenue gains, Gartner said. The company also ranks first in terms of global server shipments. HPE's global shipments during the first quarter declined 16.7 percent.
HPE CEO Meg Whitman conceded last week during a call with financial analysts that the company is rethinking its server strategy since "this is low calorie business."
Whitman nevertheless predicted plenty of upside in its flash storage business. The company reported a 33-percent year-on-year gain in all-flash array growth.
In March, Dell EMC claimed record quarterly demand for all-flash arrays that exceeded $4 billion during its fourth quarter ending in early February. Those recent financial results buttress reports from market watchers such as Dell'Oro that all-flash storage arrays appear poised to take off in enterprise datacenters.