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For most enterprises, data is a priceless asset and its storage extremely critical. From an India perspective, the journey of storage infrastructure over the last couple of years has been interesting, and last fiscal was no different. There are two ways of looking at the storage markets performance in FY 09. One, of course, is by numbers, which always have an interesting story to tell. And the other is the explosive growth of data that has kept the hope of storage players alive despite the downturn and reduced IT spending.

The slowdown did create an unfavorable environment, but the storage market did grow, primary as well as secondary storage, though it failed to keep up the momentum that was built in the previous years. While the overall external storage market grew by 18%, storage software grew by 10% over the previous fiscalcreditable considering the slowdown. Previously, in a more bullish economy, pure play vendors as well as hardware players had grown by over a 20% margin.

CyberMedia Research  DQ Estimates

In the overall external storage market, SAN grew by a healthy 32%, clearly indicating that more and more enterprises are going for high-end storage solutions. NAS on the other hand witnessed a 32% decline

It would, however, not be wrong to say that market did wake-up to newer growth verticals; a fresh new approach from a lot of players; realignment of business from the perspective of changing market dynamics (in times when spending was done with extreme caution); and a greater thrust on going the partner way (for channel focused companies like EMC, NetApp, specifically). The market did become pretty competitive on almost all fronts. Technologies around virtualization, SaaS, storage efficiency, and cloud computing kept the momentum on.

CyberMedia Research  DQ Estimates

In the SAN market, IBM with 27% market share marginally took a lead over EMC, which till last year was at #1 position. On the other hand, NetApp retained its leadership position in the NAS space with a 31% share, way above EMC, which was at second slot with a 23% share

While the demand was primarily driven by telecom, manufacturing and government sectors, traditional sectors such as finance and retail grew at a much slower pace. In the current year, storage players are betting big on web 2.0, compliance, government, animation, and video streaming. According to industry estimates, India generated 60,000 terabytes of data last year as compared to previous years 30,000 .

At present, about two-thirds of the market for storage products and software in India is with the SMB segment. According to Gartner, the domestic market is expected to grow at a CAGR of 13% through 2011, which will make it the fastest growing market in the Asia Pacific.

CyberMedia Research  DQ Estimates

Symantec ramped up its software storage portfolio by acquiring SwapDrive for online storage last year. The result: it remained the market leader with a 39% share

Numbers Talk
The overall network storage market (SAN +NAS) grew by 18%. Within that while the NAS segment growth declined by 32%, SAN witnessed a healthy 32% growth, indicating that more and more enterprises chose high- end storage solutions. Interestingly, NAS and SAN put together, IBM gained the maximum.

In absolute revenue terms, SAN (pegged at Rs 813 crore) continued to be the biggest contributor to the Indian storage market. BFSI, utilities, transportation, real estate, construction and other services were the biggest users of SAN. IT/ITeS companies also deployed SAN, by mostly aligning it with their project or client-specific requirements, while retail was another good vertical. IBM with a 27% market share took a marginal lead over EMC, which had a 26% share, a drop from 31% in FY 08in the SAN space.

During the last fiscal, the demand was driven by system upgrades by enterprise, e-governance projects (government), and a further traction that built around the SMBs. Segments that were hit big time were automation, and metals. A lot of repeat business came from enterprises that had implemented enterprise systems such as ERP and went in for upgrades last fiscal.

Within the overall network storage space, NASs share went down drastically, in both absolute as well as percentage terms. While in the first three quarters of FY 09 NetApp kept its lead with 41%, the last quarter saw its revenues Market share dip by about 20 points, even though it continued to be a leader in this space. EMC though gained by a huge margin in Q4.

While leaders set examples all others follow suit, is what seems to have been the case here as well. Both, NetApp and EMC bet big on Ethernet storage and cloud computing. For NetApp, Tata Communications was one of the big customers on cloud computing, while Plano Studios was a big win from the media space. Apart from these a lot of movement was felt within telecom, government, and BFSI verticals.

Talking about Ethernet based storage (iSCSI, NAS, fiber channel over Ethernet), it emerged as a strong option in the data center space. Storage vendors started offering advancements in the Ethernetlike 10Gbit Ethernetalong with FCoE offered performance and reliability of fiber channel at the cost of Ethernet. With storage networking vendors like Cisco and Brocade too advocating this, it is only a matter of time before Ethernet becomes the dominant storage networking protocol in the industry.

On the DAS front, things were not as bad, as the market grew by a fairly decent margin at 22%, thanks to strong demand from mid-markets, which have traditionally been the companies that do not have much data and require less expensive solutions. The cost factor obviously worked in favor of DAS, as compared to SAN and NAS, as DAS does not require the setting-up of a new infrastructure or upgrading of the existing infrastructure. And of course the simplicity of setting it up is also something that seems to have kept its demand strong in the mid-markets.

Though it was interesting to see a lot of other players trying to woo SMBs aggressively. HP was one that beefed up its SMB focus by investing in direct go-to-market strategies, leveraging the strength of channel partners in the mid-market, and expanding the number of sales professionals to support channel partners reaching the SMBs.

Both HP and IBM were gearing up to beef up their storage solutions portfolio, while at the same time trying to move away from a mere storage applications box approach. While IBM has carried out no less than eight acquisitions beginning January 2007 to shore up its storage technologies, (last one was Diligent Technologies) HP too acquired LeftHand Networks, a storage company that specializes in allocating storage for virtualized servers and using Ethernet for storage networks.

According to IDC though, this exercise did not reflect on their health at least in Q2 08, which saw the external storage systems market sales grow by 48%. Interestingly, both IBM and HP slipped from their respective one and two positions to fall behind Sun Microsystems, losing 4.6% share each and dropping to # 3 4 respectively.

Sun in Q2 made massive gains in the high-end segment, adding 5.9% to its share to close with 22% market share. While Hitachi Data Systems, which grew over five times, became the fastest growing vendor in the market.

The Software Touch
On the software front, Symantec remained the clear leader with over 39% share, while EMC was next in line with 25%. On the storage software side, technologies around business continuity planning, disaster recovery storage consolidation, virtualization, tiered storage and data de-duplication kept the momentum going.

The software storage market shaped towards modernization of storage as IT departments struggled to stay within backup windows and met recovery point and recovery time objectives. Storage management software such as archiving and storage virtualization features remained the hotspots.

Symantec, over the last couple of years, has been ramping up its storage software portfolio around three key areasdata protection, clustering, archivingvia the acquisition route. Two years back Symantec had acquired Alterus, a provider of IT management software, and in the last fiscal too significant acquisitions were made that included SwapDrive, for online storage. While EMC was doing all it could to give it a tough fight there, it worked on its backup and recovery bit by trying to address and integrate more management tools in a single interface. EMCs NetWorker, an overall backup and recovery software platform designed for enterprises, was made to support Microsofts Hyper-V virtualization system. It also made efforts to sync it better with EMCs own VMware virtualization platform. One also saw Hitachi Data Systems unveiling a new software capabilityHigh Availability Manager (HAM)in the software category.

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