Market Share Analysis: Network-Attached Storage/Unified Storage, Worldwide, 2011
In another year of growth, the year 2011 was significant for the NAS/unified storage market as EMC captured the No. 1 overall revenue ranking for the first time from NetApp and signaled the start of the movement toward unified storage by major block storage vendors.
- EMC overtook NetApp in 2011 as the No. 1 vendor in terms of overall vendor-branded revenue for network-attached storage (NAS) and unified storage through internal growth (VNX/VNXe and Data Domain) and acquisition (Isilon).
- NetApp's Data Ontap maintains its No. 1 ranking for NAS/unified storage in terms of technology platform.
- The estimated "pure NAS" market (excluding the block storage portion of the unified storage market) grew 21.5% in vendor revenue in 2011, much faster than block-based storage arrays because of the NAS support of growing vertical applications and virtualization.
- The NAS market has become increasingly consolidated with innovative products and vendors acquired by top-tier storage vendors in the past two years.
Table of Contents
- Market Share Data
Table 1 through Table 3 provide an overview of the NAS and unified storage market.
Source: Gartner (March 2012)
Source: Gartner (March 2012)
Source: Gartner (March 2012)
The overall NAS/unified storage market, illustrated in Table 1, includes NAS products that exclusively offer NAS protocols, such as NFS and CIFS, as well as unified storage that offers both NAS protocols and block storage protocols, such as Fibre Channel (FC) and iSCSI from the same system. For unified storage, Gartner estimates the NAS portion versus the block storage portion and combines the NAS portion with those pure NAS products to present an overall NAS market picture (see Table 2). For example, EMC's VNX is included entirely in Table 1, whereas the estimated NAS portion of VNX is included in Table 2.
Gartner further estimates vendor market share by OS platform (see Table 3), which depicts the competitive landscape in a different way, where branded OEM revenue is not separated from the original OEM technology provider. For example, IBM's System Storage N series, which is an OEM product from NetApp, is included under NetApp's Data Ontap revenue.
The total NAS/unified storage market had another decent growth year in 2011, with a 32.5% growth rate in terms of revenue, driven by the increasing storage area network (SAN) contribution to the unified storage market and EMC's excellent sales execution of its acquired products, namely Data Domain and Isilon. A few notable events and trends occurred in 2011:
- The concept of unified storage is no longer driven only by NAS vendors and products; block storage vendors have started to add NAS capabilities to their SAN storage arrays with a unified management interface, as well. As a result, the unified storage market has grown much faster than in the past. In fact, the FC SAN portion of the NAS/unified storage market increased by 82.3% to account for 27% of the market in 2011. We expect this trend to continue and the NAS/SAN convergence to focus on the midrange storage array area.
- With BlueArc and Pillar Data Systems being acquired by Hitachi Data Systems and Oracle, respectively, the NAS/unified storage market is now devoid of an emerging innovative enterprise player with significant revenue. The emerging vendors in Table 1 are all playing in the low-end NAS space. In the open-source space, Red Hat acquired Gluster.
- NetApp lost market share to EMC in 2011. It may continue to lose its market share if the launch of its next-generation OS Data Ontap 8.1 does not gain significant customer acceptance.
For the past decade, NetApp and EMC have dominated the NAS/unified storage market with a lion's share. In 2011, these two vendors continue their dominance with a combined share of 77.6%. EMC's acquisitions enabled EMC to eclipse NetApp's No. 1 market share ranking for the first time in history with a 41.7% market share compared with NetApp's market share of 36.0%.
EMC's fast growth in this space is mainly driven by the following factors:
- After completing the Isilon acquisition at the end of 2010, EMC grew this business by 117% in 2011. EMC's large sales force has sold Isilon's scale-out NAS systems into much wider vertical industries, especially financial services, government and healthcare. Most of the Isilon growth was still concentrated in North America and Europe.
- EMC continues to grow its Data Domain backup business. Although the triple-digit growth in the first two years after acquisition slowed to double digits in 2011, the 41% revenue growth rate is still outstanding. As a result, Data Domain accounted for a third of EMC's NAS/unified storage revenue in 2011.
- EMC's VNX unified storage is not only replacing its previous-generation Celerra NAS business, but also its CLARiiON SAN business, transferring a significant portion of its existing midrange SAN business into the unified storage market. We expect its VNX unified storage to replace completely its separate NAS and SAN arrays by the end of 2012.
NetApp grew its unified FAS storage line at about the same rate as its NAS business — both at slightly over 18% in 2011. These growth rates slowed tremendously from the 40% to 50% growth rates it experienced in 2010. Part of the slowdown was due to an external event (the federal government's debt ceiling debate gridlock in June 2011), which froze many government organizations' budgets. Another reason could be NetApp's overreliance on a limited number of large accounts. Moreover, NetApp has created uncertainty about its next-generation OS, Data Ontap 8.1, whose official launch date has yet to be known.
From the technology platform's perspective, NetApp's Data Ontap platform is still clearly the market leader in the NAS/unified storage market with more than 40% market share in revenue (see Table 3). NetApp also stands out with a single OS platform for both NAS and SAN support and both primary and backup/archive usage, whereas EMC and other storage vendors have to resort to multiple OS platforms to compete at the same level. On the other hand, EMC and other vendors could argue that each of their platforms is more optimized for certain workload characteristics and may do a better job than NetApp's "one platform fits all" approach. The key continues to lie on the management layer — how those various platforms are tightly integrated and can be managed by a common, intuitive tool. EMC's Unisphere is a good step with positive user feedback, but all vendors with various storage platforms face continued challenges in the common management area.
Below the top two vendors, the distant third is IBM, which had about 5% of the revenue market share in 2011. Gartner estimates that 97% of IBM's NAS/unified storage revenue in 2011 came from its N Series, which is a rebranded OEM product from NetApp. We believe IBM's SONAS has not achieved a significant revenue stream. The adoption of the newly launched NAS capability for its Storwize V7000 SAN storage arrays remains to be seen.
HP — with 1.7% market share — had a modest 11.8% revenue increase in 2011, lower than the industry average of 32.5%. Most of HP's NAS/unified storage revenue came from its X1000 and X3000 series, which are based on Windows Storage Server. HP continues to work on its Ibrix technology, whose scale-out capability has been extended to its D2D StoreOnce deduplication backup appliances. HP is also working on tighter integration between Ibrix and its block storage platforms, such as LeftHand and 3PAR.
Oracle — with 1.5% market share — acquired Pillar Data in the summer of 2011. Although both the Pillar Axiom and the Sun ZFS Storage Appliance are unified storage, supporting both block and file protocols, Oracle has decided to differentiate the two products by focusing on each of their strengths: marketing the Axiom mainly as an FC SAN storage array and the ZFS appliance mainly as a NAS system. Oracle's NAS/unified storage revenue market share declined by 8% in 2011. We believe it's because Oracle seems to be more focused on integrating the ZFS appliance with Oracle's software solutions (such as being used for Oracle backup) and less so on the general-purpose NAS capabilities, such as support for VMware and Microsoft.
Dell's NAS/unified storage revenue grew 13.2% in 2011, garnering a 1.2% market share. Dell has been another major seller of Windows Storage Server-based NAS products, aside from HP. However, Dell launched a new NAS series based on its own intellectual property (acquired Exanet asset, now called the Dell Fluid File System) in the second half of 2011. The Dell Fluid File System is the foundation for the new NX3500, which uses the PowerVault MD (NetApp Engenio OEM) as the back-end storage, and the new EqualLogic FS7500, which is managed by the same EqualLogic management tool for a unified management experience. Although based on a scale-out architecture, it offers limited scalability today, as most of Dell's SAN customers are small and midsize enterprises. Dell is currently working on a Fluid File System front end for the Compellent SAN array.
Hitachi/Hitachi Data Systems has been offering NAS gateway products based on the BlueArc OEM relationship, mainly as a defensive move to fend off competitors encroaching upon its SAN space. However, in September 2011, Hitachi Data Systems acquired BlueArc, signaling that BlueArc's capability to tackle large unstructured data is becoming more strategic for Hitachi Data Systems. Including BlueArc's revenue in 4Q11, Hitachi's NAS/unified storage revenue market share in 2011 grew 61%. However, its market share is still less than 1%.
The rest of the vendors listed in Table 1 are low-end NAS vendors. Netgear, QNAP and Synology are all Linux-based NAS vendors that target small offices and home offices (SOHO), as well as consumers. In our market statistics, we include only the estimated SOHO portion of their unit shipments and exclude the consumer portion. QNAP and Synology are shipping diskless enclosures only, but our revenue figures include estimated average disk drive revenue per enclosure. This methodology aims to gauge the overall NAS/unified storage market size more realistically with the sacrifice of vendor revenue accuracy. In the low-end NAS/unified storage arena, we believe that the unit shipment metric is a more important market share metric than in the midrange and high end.
In the fourth quarter of 2011, flooding in Thailand in October caused a severe hard-disk drive (HDD) shortage. The impact on the low-end NAS is much more pronounced than on the midrange and high end for the following reasons:
- The top vendors in the low-end NAS market are not top-tier storage system vendors, except EMC, which owns Iomega. They do not have enough disk drive sales volume to form a strategic relationship with HDD suppliers.
- To compound the situation, some vendors sell diskless enclosures and can't help users fulfill their drive requirements.
- Low-cost, high-capacity drives are most often used in low-end NAS systems, and these types of drives were impacted by the flood more severely than enterprise, high-performance drives.
HDD price hikes for low-end NAS occurred soon after the flooding, much sooner than for the midrange and high end, where vendors announced 5% to 15% HDD price increases starting in January or February 2012.
Table 4 lists the mergers and acquisitions (M&As) in the NAS and unified storage space since December 2010.
Acquired by EMC by the end of December 2010
Acquired by Oracle in August 2011
Acquired by Hitachi Data Systems in September 2011
Source: Gartner (March 2012)