How A Worldwide Decline In Storage Systems Sales Impacts EMC
Storage systems vendors have observed a decline in revenues due to a slowdown in hardware sales over the last couple of years. As a result, prominent vendors such as EMC (NYSE:EMC, NetApp (NASDAQ:NTAP), IBM (NYSE:IBM), Hitachi Data Systems and HP Enterprise (NYSE:HPE) have seen weakness in storage revenues. Moreover, the declines reported by these vendors has been greater than the industry-wide declines, since these sellers are increasingly facing competition from smaller vendors and flash-storage startups.
Over the last six to eight quarters, customer preference has been shifting to low-cost original design manufacturer (ODM) storage boxes, which is cutting into the addressable market for large vendors. [1] [2] EMC’s share in the storage systems market declined from 31.3% in 2013 to under 30% in 2015, as its revenues declined at a CAGR of almost 4% compared to the industry-wide decline of 1% in the same period.
- Dell-EMC Deal Finally Closes: A Look At How The Merger Could Impact HPE & IBM
- EMC Earnings Takeaways: Flash Array, VMware, Services Continue Growth
- EMC Earnings Preview: Storage Hardware Sales To Remain Suppressed, Services To Drive Growth
- Why You Should Take A Closer Look At EMC’s EPS Growth
- How Valuable Is EMC’s Information Storage Business?
- EMC Earnings: Weakness In Hardware Remains, Non-Core Businesses Drive Growth
The trend continued in the March quarter this year, as EMC reported an 8% year-over-year decline in combined product revenues for the quarter. According to the Q1 performance of storage systems vendors compiled by IDC, EMC’s share in the market stood at 24.9% as its revenue declined by nearly 12% on a y-o-y basis. [3] The March quarter was the first quarter for which IDC reported a year-over-year decline in total capacity shipments – a 4% decline to 27.8 exabytes shipped through the quarter.
We forecast EMC’s storage hardware revenue to decline at a CAGR of 2% over the next few years, which would negatively impact its share in the market. Despite the likely decline, EMC’s share in the market will likely remain significantly higher than its competitors. NetApp, HPE and IBM all have 8-11% market shares.
Have more questions about EMC? See link below:
- How Valuable Is EMC’s Information Storage Business?
- EMC Earnings: Weakness In Hardware Remains, Non-Core Businesses Drive Growth
- How Valuable Is VMware To EMC’s Business?
- ODM Storage Vendors Gain Share From Giants: EMC, HP, IBM, NetApp Lose Market Presence
- What’s EMC’s Fundamental Value Based On Expected 2016 Results?
- What Will EMC’s Revenue And EBITDA Look Like In 5 Years?
- How Has EMC’s Revenue & EBITDA Composition Changed Over The Last Five Years?
- What’s EMC’s Revenue & Earnings Breakdown By Segment?
- What Is EMC’s Presence In The Storage Systems Market?
- EMC Earnings: Weakness In Hardware Remains, Non-Core Businesses Drive Growth
Notes:
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research
- The Rise Of White-Box Storage, Network Computing, August 2014 [↩]
- Gartner Says Data Center Infrastructure ODMs Are a Key Threat to Data Center OEMs’ Direct Business, Gartner Press Release, September 2014 [↩]
- Worldwide Enterprise Storage Market Sees Continued Decline in First Quarter, IDC Press Release, June 2016 [↩]