Current Overview

On June 7th and 13th, 2013, IDC and Gartner respectively released their quarterly assessment of the external disk storage systems market. IDC suggested a decline of 0.9% comparing the first quarters of 2012 and 2013. Gartner, on the other hand, reported growth of 0.6% for the same period.

Neuraspective™

Firstly, these conflicts are not unusual. IDC and Gartner’s taxonomies (or their definitions of what is an “External Storage System” in IDC’s nomenclature, or “External Controller-Based Disk Storage” in Gartner’s terminology) differ slightly. These differences (minute as they are), are sufficient to account for the $500M delta in their respective market sizing.

So, who is right?

Here, it becomes less clear. It is also here, that we can begin to draw parallels to analytics and Big Data. The answer to who is right can be both:

• They both are; and
• Neither of them.

One of the major drawbacks of statistical analysis is that depending on the definition (or taxonomy) that is used, and the way the statistician applies those definitions, they can conclude differing results. It is akin to the cliché that if one asks an economist an answer, you can get more than one answer in return.

Now I’m even more confused!

As objective as both IDC and Gartner claim to be, there will always be an element of subjectivity. Both companies rely on reported numbers supplied to them by specific vendors. These numbers are non specific, and as a result, require significant interpretation before they are inserted into their respective models.

This is why the growth numbers can differ quite significantly:

	1Q’11-1Q’12	1Q’12-1Q’13
IDC	7.1%	-0.9%
Gartner	8.0%	0.6%

Source: IDC & Gartner press releases

So as a consumer of these numbers, it is necessary to look at the trends and magnitude rather than the actual (or absolute) numbers themselves.

In this case, both IDC and Gartner are proposing a decline in the market. This is the trend. Both suggest a 6.2% to 7.4% decline in the overall market (this is the magnitude).

Based on these two data points, one can reasonably conclude that there has been a significant (over 5%) decline in the market. That is about all we can truly say about the external storage market overall.

This is also where qualitative market research becomes so important.

Quality over Quantity

Just because a market is in decline, does not necessary signal an apocalyptic end. What neither company discloses in their press releases, but they do in their paid reports are the capacity numbers. As the prices of disk drives (a major cost component in disk storage systems) decline, and the areal density improves, the capacity could well exceed the (roughly) 7% decline in revenues.

For example, a 1TB may cost $1,000 in 2012, but may now be $700 in 2013. Conversely, for $1,000, consumers may get 1TB in 2012, but could possibly get 1.5TB to 2TB in 2013.

These nuances can change the overall outcome of an analysis dramatically.

Additionally, deduplication, compression, thin provisioning and other data reduction technologies augment the capacity argument in a multiplicative manor. In fact, Neuralytix believes that the improvements in data reduction technologies far exceeds the reported declines in revenue.

Finally, the massive interest in solid state disk drives (SSDs) for integration in external storage systems over the last 12 months is likely to have caused the pull back in revenue reported. For many large enterprises, the integration of SSDs can actually reduce their investments by 20% or more. Although SSDs cost more per unit of storage than traditional hard disk drives (HDDs), the performance of SSDs outpace HDDs by at least one order of magnitude.

So for observers of the storage industry, you can take a big sigh of relief. The end is not yet nigh! Neuralytix believes that by bringing more independent in-depth qualitative research in concert with quantitative modeling, will provide the market with a much better, and informed understanding of the dynamics that occur in any given market.