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Flash Remains the Only Bright Spot in Another Lackluster Quarter for EMEA External Storage, Says IDC

June 2016 by IDC

Total EMEA external storage systems revenue fell 4.9% year over year to $1.64 billion in the first quarter of 2016 (1Q16), according to the EMEA Quarterly Enterprise Storage Systems Tracker 1Q16 from International Data Corporation (IDC). The capacity shipped in the quarter also dropped 3.5%, indicating a move away from external storage to internal storage in the region.

For the first quarter, the traditional hard disk array (HDD) segment in EMEA declined for yet another quarter, falling 23% in user value. The flash market, on the other hand, recorded another bumper quarter, with all-flash systems growing 96% annually and hybrid flash arrays growing at a more modest 4% YoY. Bucking the overall trend of a decline in capacity shipped, flash arrays recorded triple-digit growth in capacity this quarter, accounting for nearly 60% of total shipments.

"Flash is the only vivid note in yet another lackluster quarter characterized by unstable emerging markets and a negative seasonality effect," said Silvia Cosso, senior research analyst, European Storage Research, IDC. "The additional slowdown is due to the portfolio transition by major vendors, but also due to investments put on hold as they wait to see how the large acquisitions announced last year will materialize. On a positive note, the exchange rate effect was milder than in the previous quarters."

Western Europe

The Western European external storage market continued its decline for another quarter, falling 4% YoY in 1Q16, due to the continuing downward trend in the traditional storage segment. Western Europe’s storage revenue exceeded $1.2 billion and capacity shipped dropped 11% YoY to 2.18 exabytes.

"External storage continued to decline in 2016 in Western Europe as traditional storage arrays struggle to attract investment," said Archana Venkatraman, senior analyst, European Storage Research, IDC. "The double-digit drop in capacity in 1Q16 demonstrates how mature Western European organizations are moving to newer, more intuitive storage technologies such as internal or server-based storage to meet their capacity requirements. In the next few quarters we expect to see continued growth in flash storage and a push to internal storage as organizations take an integrated approach to their infrastructure to take it closer to application needs."

Central and Eastern Europe, the Middle East, and Africa

Although the external storage market in Central and Eastern Europe, the Middle East, and Africa (CEMA) continued its downward trend (-7%) at the beginning of 2016, there was some improvement over previous quarters, mostly coming from the Central and Eastern Europe (CEE) subregion. Regional storage revenue reached $393.7 million and capacity saw double-digit growth to 740.0 petabytes.

The CEE storage market was impacted by the seasonal effect, with most countries in the region having a slower quarter than the stronger 4Q15. Russia, however, benefited from an upturn in investment by government and large businesses in high-end storage projects, which boosted its growth and brought the region to almost flat performance.

In the Middle East and Africa (MEA), likewise, only the largest countries — Israel, Turkey, South Africa, and United Arab Emirates — recorded revenue growth due to realized infrastructure projects by the public, telecommunication, and financial sectors, while vendors in the other countries suffered from delayed projects and still relied on run-rate business. Flash-optimized storage business continued to thrive, seeing triple-digit growth and accounting for more than 50% of the market (following suit with Western Europe).

"The coming quarters will be challenging for the incumbents as the CEMA storage market will have its ups and downs," said Marina Kostova, senior research analyst, Storage Systems, IDC CEMA. "Market performance will be boosted by a moderate recovery in the subdued storage demand. At the same time, the pace of adopting new storage technologies is accelerating and the source of growth is shifting from traditional storage arrays to alternative solutions. This will be a threat for some vendors and an opportunity for others, ultimately leading to changes in the regional competitive positioning."

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