The surge to the cloud will see both Amazon Web Services (AWS) and Microsoft become top five storage vendors by 2017, as spending on public cloud storage doubles to more than 17% of total enterprise storage spending by 2017. In some verticals, such as retail, public cloud will rise to as much as a quarter of the total market, according to the study.
While the storage market as a whole continues to grow, the research forecasts that spending on storage installed on-premises in enterprise datacenters will shrink from 70% of the total market in 2015 to 58% in 2017.
Traditional storage area network (SAN) and network-attached storage (NAS) products are losing out in favor of either public cloud or solid state storage arrays based on flash memory. Tape products will see the largest spending declines, with many enterprises determined to upgrade their backup and disaster recovery capabilities in 2016.
Pressure on NetApp, IBM
While EMC will likely retain its market leadership, the squeeze on incumbents will put most pressure on IBM and NetApp, says the report's author Simon Robinson, who heads up 451's storage and information management practice. The challenges facing enterprise storage managers haven't changed, but they are now more open to consider new approaches. He told us by email:
We see the continuation of a trend that has been evident for a couple of years. The overall traditional SAN market is being squeezed — especially at the high-end — as IT organizations look to sweat their assets and, often for the first time in years, begin to evaluate alternative approaches.
What is notable is that cloud storage suppliers are increasingly being viewed as strategic providers, and not just niche or edge use cases.
Another bright spot that will see healthy spending growth are next-generation storage technologies such as Hyperconverged Infrastructure (HCI) products and Object Storage.
It’s fairly fragmented at present, but when you add it all up you can’t ignore it. The likes of Nutanix, Pure, Veeam and Nimble have all being growing well and are well represented in our research. One newer player that seems to be making an impact in storage is InfiniDAT.
The new study by 451 Research is the first in its Voice of the Enterprise series to focus on storage. The findings are based on online research with 721 IT and storage decision-makers worldwide, supplemented by 25 in-depth phone interviews.
Three data points stand out to me from reading today's report.
- AWS surges from 6th place to 2nd as the vendor respondents will spend the most with on storage, while NetApp plunges from 2nd to 6th. That's a seachange in mainstream perceptions of storage players.
- I've always been surprised how few enterprises use the cloud for DR and backup, when you consider that a sensible disaster recovery strategy puts the data in a different location anyway (data gravity notwithstanding). But what's striking is that this has suddenly become a big driver of cloud adoption, as if a dam has just broken.
- The big move to the cloud in retail no doubt reflects not only growth in data volumes but also the need for intensive data analytics that require elastic cloud capacity, as illustrated by this week's tie-up between Infor and cloud-based retail analytics specialist Predictix. We'll see this trend repeated in other industries as takeup of machine intelligence for data analytics ripples out.
To round out the water analogies, I suspect incumbent vendors will continue to react too slowly as the pot continues to boil around them. With overall demand continuing to grow — and newer technologies offering more bang for the buck, which means their market takeup is under-represented in the overall spend — the incumbents will comfort themselves that they are retaining the majority of their business.
While NetApp has recently made a move to buy flash array specialist solidFire and IBM could potentially steer buyers towards its SoftLayer cloud unit, the reality is that the inertia of existing relationships will delay action until it's too late. We've seen this pattern play out again and again as cloud has invaded each new segment of enterprise IT spend. By the time the incumbents realize just how much mindshare they have lost, the battle will be all but over.
Image credit - Boiling blue kettle steaming - Fotolia.com.
Disclosure - At the time of writing, Nutanix is a diginomica premier partner and 451 Research is an affiliate partner.