UPDATED 09:42 EDT / NOVEMBER 05 2015

NEWS

Wikibon: Convergence spells the end of storage as we know it

The storage industry has been in turmoil, with solid-state flash replacing spinning disk and new companies entering to challenge the market leaders. At the same time storage is being subsumed into larger packages – converged and hyper-converged systems and especially cloud services.

Cloud giant Amazon Web Services (AWS) alone will account for somewhere between $1 billion and $2 billion in storage services revenue, as part of its estimated $8 billion in total revenues for 2015, writes Wikibon Senior Analyst Stuart Miniman in “The End of the Storage Industry As We Know It.” By comparison, Miniman says, the total revenues of the four new entrants to go public this year – Fusion-io Inc., Violin Memory Inc., Nimble Storage Inc. and Pure Storage Inc. – total less than $1 billion.

And AWS, while the largest player in the public infrastructure-as-a-service market, is only part of the total. Two-thirds of business cloud revenues are from software-as-a-service (SaaS), a fragmented market led by Salesforce.com Inc., Adobe Systems Inc. and SAP SE. Wikibon Cloud Analyst Brian Gracely listed Salesforce in third place overall and ahead of IBM in total business cloud revenues in his recent report on the cloud market. When companies contract with SaaS providers, their data almost always moves to the cloud. Internet of Things, which is expected to be the next big factor in the industry, will greatly increase the amount of data stored in the cloud over the next five years.

In the on-premise hardware market, the growth is almost entirely in converged and hyper-converged systems. Dell Inc.’s, acquisition of EMC is only likely to drive this trend further. With that acquisition and the Hewlett-Packard Co. break-up, Dell will be the only vendor covering the full range of on-premise IT, from desktop/mobile to large servers and storage. At the recent Dellworld 2015 last week, Michael Dell announced that the combined company will create a new enterprise division headquartered in Hopkinton, MA, that combines Dell and EMC assets. The strategy will be to sell complete infrastructure solutions, either as converged boxes or custom combinations, into the enterprise market.

These trends are also driving change in the IT organization. Converged and hyper-converged systems work across the traditional IT silos, while cloud moves the infrastructure out of the data center entirely. The traditional storage measures such as dollars-per-gigabyte are being supplanted by service costs and time-to-value.

The huge growth in data means overall storage capacity will grow rapidly, although costs shouldn’t go up in proportion as increasing amounts of that storage will be in the cloud. Meanwhile, the cost of flash storage will continue to drop rapidly. However, storage as a line item in the IT capital and operating budgets will shrink and potentially disappear entirely as storage becomes a part of complete systems and services packages.

EMC created the storage market as a separate entity when it developed stand-alone arrays. Now its sale to Dell may signal the beginning of the end of that stand-alone market in the face of infrastructure convergence and cloud services. In that sense, Miniman writes, we may be seeing the end of the storage market as we have known it.

photo credit: formatbrain via photopin cc

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