EMC’s XtremIO Launch Targets Flash Array Market

EMC (NYSE:EMC) Corporation announced the general availability of EMC XtremIO, the company’s first all-flash storage array, last week. The external storage giant acquired XtremIO, a flash storage startup, last year in order to capitalize on the flash memory-based systems and software market (EMC Extends Flash Storage Expertise With XtremIO Acquisition). The launch of XtremIO is likely to establish EMC in the fast growing flash array market. ^[1]

EMC is the market leader in the external storage segment, with a 32.7% market share – up from 30% last year. With the launch of XtremIO, EMC expects to have an early advantage in the enterprise storage market. The newly developing flash storage array market is expected to grow rapidly to become a $1.2 billion market by 2015, according to International Data Corporation (IDC). ^[2] Given these expectations, EMC’s presence in this segment should drive sales growth going forward.

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XtremIO And Flash Storage Array Segment

Leading storage companies like EMC, NetApp and IBM are looking to switch their core customers to solid state flash-based systems in an attempt to cater to the growing industry demand for high performance input output per second (IOPS) storage and systems with a better throughput. XtremIO provides the high performance storage solution that the market is now shifting to. Most flash arrays have an unpredictable Input-Output (IO) cycle and inconsistent throughput rates, making it difficult for consumers to efficiently use their resources. EMC has worked on predictability and consistency in IO operations and performance in spite of utilizing less physical space and using less power compared to other flash arrays.

According to the 2012 Gartner report, virtualization workloads are likely to grow at a CAGR of more than 30% through 2016, which is almost a fivefold increase from 2011. EMC owns 80% of VMware – the market leader in virtualization and cloud computing. Growing industry demand for big data storage owing to server virtualization and cloud computing is likely to benefit EMC going forward (see VMware Tie-Up Can Add To EMC’s Growth). The XtremIO array is fully integrated on vSphere, VMware’s cloud computing operating system by being compatible with VMware’s vStorage APIs for Array Integration (VAAI).

The flash storage array segment may account for a relatively insignificant portion of revenues in the immediate future, but it is a fast-growing segment of the enterprise storage space. EMC’s near-term earnings are likely to be driven by growth in cloud computing and virtualization rather than flash-based arrays, but in the long run we expect the flash arrays to play a pivotal role.

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1. EMC Press Release [↩]
2. IDC Press Release [↩]