EMC’s a Key Beneficiary of Rapid Growth in External Storage Market

Despite uncertain economic conditions and companies maintaining tight control on IT budgets, the global external disk storage market is growing massively. According to IDC data, the overall external disk storage market posted double digit growth in Q2 2011 on year over year basis, and EMC (NYSE:EMC) maintained its leadership with around 28% revenue share followed by IBM (NYSE:IBM) and NetApp (NASDAQ:NTAP) with ~14% and 13%, respectively. Exponential growth in digital information and greater adoption of newer technologies like cloud computing, big data and virtualization have contributed to growth in external storage systems, and EMC will be the biggest beneficiary with its stronghold in SAN and NAS markets as well as continued growth in unified storage.

While we estimate the total storage hardware market in terms of total gigabytes sold will increase from 23 billion to 174 billion by the end of our forecast period, Trefis members expect an increase from 31 billion to 185 billion during the same period.

We currently have a Trefis price estimate of $37.60 for EMC’s stock, about 70% above the current market price.

External Storage Market Grows in Q2

According to IDC research, the total disk storage systems market revenues grew by 10.2% y-o-y reaching $7.5 billion while the global external disk storage systems factory revenues totaled 5.6 billion, an increase of 12.2% y-0-y. ^[1] The sub-segments such as networked-area storage (NAS) and storage area network (SAN) witnessed double digit growth led by continued investments by enterprises in newer technologies involving virtualization, big data and cloud computing. We expect the rapid growth in digital information compounded by increasing broadband usage will keep the external hardware storage market elevated in the coming quarters.

EMC Leads the Pack

EMC maintained its lead over competitors like IBM, HP, Dell and NetApp with overall revenue share of 28.7% in external disk storage market. It also dominated the sub-segments like NAS and SAN markets with 32% and 26% revenue shares respectively. EMC’s key products in external disk storage include brands like Issilon, Celerra and ClariiON. It also expanded its unified storage products few months ago under its VNX storage platform, giving it an edge over NetApp. (Read: EMC’s Focus on Unified Storage a Concern for NetApp) EMC today announced a Greenplum modular data computing appliance that tries to unify big data analytics by processing structured and unstructured data together. ^[2]

Our complete analysis for EMC’s stock is here.

1. IDC: External disk storage systems report strong growth in Q2, WWPI.com, Sept 2, 2011 [↩]
2. EMC Delivers Industry’s First Unified Big Data Analytics Appliance, Press Release, Sept 21, 2011 [↩]