International Data Corp. has published its latest quarterly storage tracker, and it serves to illustrate the rapidly growing popularity of software-defined storage (SDS).

IDC’s data shows that sales from smaller manufacturers who sell directly to cloud giants like Google and Facebook are on the up, while the traditional external storage system market continues to decline.

Companies like Facebook and Google typically buy generic hardware that’s controlled by software for their data centers, rather than the specialized storage platforms sold by legacy giants like Dell Inc. and EMC Corp. And as these companies expand, the market for these cloud-based storage services is rapidly growing – in the last quarter, original design manufacturers (ODMs) who sell to hyperscale data centers like those owned and operated by Facebook and Google saw revenues grow by 25.8 percent to over $1 billion in Q2. That’s compared to overall storage industry revenue growth of just 2.1 percent to $8.8 billion in the quarter.

Most of these ODMs are relatively unknown companies, with two of the largest being Taiwan-based Quanta Computer Inc. and Wistron Corp.

While most enterprises continue to buy from better known manufacturers like Dell and EMC, the hyperscale deployment trend is rapidly growing across the tech industry. IDC says that most Web giants just opt for bog standard x86 servers that are dedicated to storing data, and sales of these units rose by 10 percent to $2.1 billion for the quarter.

In contrast, sales of traditional external storage systems like SANs declined by 3.9 percent. Though with $5.7 billion in revenues, they still represent the most popular choice for enterprises.

Eric Sheppard, Research Director of IDC’s Storage program, told Computerworld that most storage firms are now shifting focus to virtualized systems where software defines the storage architecture. Just like with virtualized computing, it’s possible to manage storage per virtual machine rather than per storage unit, which has the effect of simplifying management and reducing overheads.

However, Sheppard told Computerworld it’s still “very early days” in the software-defined storage world, and its market share will continue to grow for the next five years.

Despite this new trend, the legacy vendors continued to duke it out at the top even as they cast worried glances over their shoulders. EMC stayed out in front with a 19 percent market share, with Hewlett-Packard Co. coming in second with 16 percent. Nevertheless, EMC will be concerned that it’s overall storage revenues declined by four percent.

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