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Storage spending veers toward cloud

7/09/2015 by Sharon Shahzad


Sales are growing fastest for companies that ship generic storage hardware to big cloud providers, IDC says

The cloud is where the action is in enterprise storage.

Sales are way up for little-known manufacturers that sell directly to big cloud companies like Google and Facebook, while the market for traditional external storage systems is shrinking, according to research company IDC. 

Internet giants and service providers typically don't use specialized storage platforms in their sprawling data centers. Instead, they buy vast amounts of capacity in the form of generic hardware that's controlled by software. As users flock to cloud-based services, that's a growing business. 

Revenue for original design manufacturers that sell directly to hyperscale data-center operators grew by 25.8 percent to more than US$1 billion in the second quarter, according to the latest global IDC report on enterprise storage systems. Overall industry revenue rose just 2.1 percent from last year's second quarter, reaching $8.8 billion.

These so-called ODMs are low-profile vendors, many of them based in Taiwan, that do a lot of their business manufacturing hardware that's sold under better known brand names. Examples include Quanta Computer and Wistron.

General enterprises aren't buying many systems from these vendors, but the trends at work in hyperscale deployments are growing across the industry. Increasingly, the platform of choice for storage is a standard x86 server dedicated to storing data, according to IDC analyst Eric Sheppard. Sales of server-based storage rose 10 percent in the quarter to reach $2.1 billion. 

Traditional external systems like SANs (storage area networks) are still the biggest part of the enterprise storage business, logging $5.7 billion in revenue for the quarter. But sales in this segment were down 3.9 percent. 

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