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Cloud casts deep shadows over disk backup market

EMC first, daylight second, but sales dipping sharply and Microsoft in the wings

Lenticular Cloud

Abacus-wielder IDC has run its eye over the “purpose-built backup appliance” (PBBA) market and proved, if it were necessary to do so again, that by golly things are changing quickly in the storage caper.

EMC dominates the market for such PBBAs, taking in US$469.9m in 2015's second quarter to claim 60.1 per cent of the market.

But the news isn't all good because EMC's business was off by 5.8 per cent, more than the industry's one per cent slump in the quarter.

Barracuda was the unlikely winner, up 67.6 per cent to $26.8m of sales, welcome news for a struggling company.

Here's the tale of the tape.

Top 5 Vendors, Worldwide PBBA Factory Revenue, Second Quarter of 2015 (Revenues in $ Millions)

Vendor

2Q15 Revenue

2Q15 Market Share

2Q14 Revenue

2Q14 Market Share

2Q15/2Q14 Growth

1. EMC

$469.9

60.1%

$498.7

63.2%

-5.8%

2. Symantec*

$104.5

14.4%

$108.5

13.7%

-3.7%

3. IBM

$54.0

7.4%

$53.6

6.8%

0.8%

4. HP

$36.7

5.1%

$33.7

4.3%

8.8%

5. Barracuda

$26.8

3.7%

$16.0

2.0%

67.6%

Others

$89.6

12.3%

$79.0

10.0%

13.4%

Total

$726.1

100.0%

$789.5

100.0%

-8.0%

Source: IDC Worldwide Purpose Built Backup Appliance Quarterly Tracker, September 17, 2015

* Note:  Symantec includes the Veritas business

The source of the slump is cloud. Liz Conner, IDC's research manager for storage systems says "Focus continues to shift away from hardware-centric, on-premise PBBA systems to hybrid/gateway systems.”

“The results are greater emphasis on backup and deduplication software, the ability to tier or push data to the cloud, and the increasing commoditization of hardware, all of which require market participants to adjust product portfolios accordingly."

In other words, EMC did very well to buy Data Domain in 2009, but these days punters have come to realise that there are better ways to do backup than just shuffle it onto boxes full of disks. NetApp, therefore, is perhaps now happy it missed out on Data Domain as its DirectConnect to Amazon Web Services is increasingly the way backup gets done.

Let's not get all excited and proclaim NetApp's ahead here: EMC is still hauling $450m a quarter through the door, and that's before maintenance and the fat-margined services deals that so often follow a sale. Even with an annual decline, there's a few years of decent sales ahead and perhaps a little salvation for Barracuda.

A last thought: Microsoft is very well positioned indeed in the hybrid/gateway caper, thanks to its StorSimple acquisition. Redmond's willing to give away gateways to those who sign up for lots of Azure, an offer none of the incumbents above can easily match. ®

Bootnote

Following IDC’s issuance of a small correction, some of the figures relating to EMC have been altered.

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