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IDC numbers show chink in NetApp wall

Time for a peer into the crystal ball

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IDC's second quarter disk storage revenue numbers show NetApp and Dell both losing ground.

These numbers measure worldwide factory revenues for external disk storage systems and for the total disk storage systems category. Differences are revealed by contrasting the year-on-year second quarter growth numbers and also by looking at the comparison between the first and second 2011 quarters, which show up NetApp's malaise.

External disk storage systems

There are three key aspects to the picture in the external disk storage systems market.

Firstly, NetApp has slipped from second to third place in the rankings compared to the previous quarter. It had a 13.5 per cent share then but has only 12.8 per cent now; whereas IBM, with whom it has changed places, has grown from a 12.2 per cent share to a 13.7 per cent one.

NetApp revenues grew at 25.7 per cent year-on-year while IBM's grew less at 13.4 per cent, but the sequential picture shows that NetApp's growth is now less than IBM's, as Big Blue has accelerated. Is this just a blip or is it the first chink in the wall of growth that NetApp has been enjoying for many quarters?

Secondly, EMC, NetApp and Hitachi grew revenue year-on-year in double digits while IBM and HP grew in single digits with HP below the 12.2 percent market growth at 9.1 per cent. Dell and the "others" category saw revenue declines of 5.9 and 6.6 per cent respectively. We should note that Hitachi has lost revenue share sequentially, having 9 per cent in the first quarter but 8.1 per cent in the second quarter.

Thirdly, Dell has felt the loss of EMC sales but EMC has not felt the loss of sales through Dell. EMC has gained Isilon, but then Dell gained Compellent. However, Dell has broken free of the "others" category, where it had been languishing in the previous quarter.

The overall rankings are EMC first (28.7 per cent share); IBM (13.7 per cent) and NetApp (12.8 per cent) in a statistical tie for second place; HP with 11 per cent in thrid; in fourth place, Hitachi (8.1 per cent) and Dell (7.9 per cent) in a tie; and then the others.

Total disk storage systems

Here the rankings are EMC first with 21.6 per cent; HP second with 19.2 per cent; IBM third with 15.5 per cent; Dell fourth with 11.1 per cent; and NetApp fifth with 9.6 per cent. These rankings have not changed year-on-year. The market grew at 10.2 per cent while three suppliers grew less: HP (10.1 per cent), IBM (8.1 per cent), and Dell (-0.1 per cent). The "others" category declined too (-0.4 per cent). EMC grew at 26 per cent and NetApp at 25.7 per cent.

Again, the sequential comparison tells a different story. In the fist quarter, NetApp had a 10.1 per cent revenue share. That declined to 9.6 per cent in the second quarter. Dell declined from 10.1 per cent to 9.6 per cent over the same period. EMC, HP and IBM grew sequentially. Considering that the "others" category also declined from 25.2 per cent to 23 percent, then EMC, HP and IBM each captured market share from NetApp, Dell and the others.

What is the underlying story here? EMC is rampaging on. IBM has accelerated its storage sales compared to the first quarter whereas both NetApp and Dell are hurting. In Dell's case, it has lost its EMC-sourced sales but gained Compellent, apparently not compensating for those lost CLARiiONs yet.

Why NetApp has slipped back is less easy to understand and we suspect it is the VNX factor, EMC's CLARiiON replacement.

Another point: HP is not doing so badly. Despite the EVA line getting long in the tooth, HP is clearly progressing well with 3PAR and its other storage products.

What does El Reg expect will happen next quarter? Our crystal ball suggests Dell will recover and HP may well get back to market growth rate or above, but what about Hitachi and NetApp? Hitachi's decline is unexplained, as is NetApp's. Until we understand why they have slipped back, we can't say what might happen. There is an unresolved Hitachi problem in Tokyo and another in NetApp's Sunnyvale HQ. ®

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