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Storage sales dropped in Q1, especially on high end

It comes as no surprise to anyone who followed vendors’ most recent earnings reports that storage systems revenues dropped significantly during the first quarter of 2014. Or that sales of high end storage systems were way down.

External disk storage revenue fell 5.2 percent from the first quarter last year to $5.6 billion, according to IDC storage tracker figures released today. That followed a 2.4 increase in the fourth quarter of 2013 over the previous year.

The big drop last quarter was driven largely by a 25 percent decline in high-end storage spending. IBM and EMC cited steep revenue declines in their high end arrays during their earnings reports. Erick Sheppard, research director for IDC storage, said other factors driving down revenue include better adoption of storage optimization technologies, companies are keeping their systems longer, economic uncertainty, and more data is going to public clouds.

IBM’s performance was especially dire. Its $497 million in revenue fell 22.5 percent and its market share dropped from 10.8 percent to 8.8 percent. But all of the top five vendors’ revenue decreased. EMC maintained its big lead in market share, but its revenue fell 8.8 percent to $1.64 billion and its market share decreased from 30.2 percent to 29.1 percent. NetApp remained second and its revenue fell 2.8 percent to $854 million but its market share increased from 14.8 percent to 15.1 percent.

Hewlett-Packard and Hitachi Data Systems were in a statistical tie for third with IBM (all three were within one point of market share). HP’s revenue fell only .7 percent – the lowest drop of the top five – to $498 million and its market share increased from 8.4 percent to 8.8 percent. HDS fell from 8.9 percent to 8.7 percent market share after a 6.8 percent revenue drop to $493 million.

The rest of the market increased revenue 3.7 percent to $1.66 billion. That includes Dell, which finished sixth with 7.3 percent market share. Market share for “others” increased from 26.9 percent to 29.4 percent.

Overall storage revenue – including servers – dropped at an even greater rate. The total market dropped 6.9 percent to $7.32 billion. The revenue for EMC and NetApp were the same because they do not sell servers, but IBM dropped 20.5 percent, Dell declined 19 percent and HP was down 8 percent. Revenue from the rest of the market increased 6.8 percent and went from 25.1 percent market share last year to 28.8 percent share.

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