I Admit that NetApp Isn't the "Top Ranked" Network Storage Vendor

In a recent blog, I excitedly pointed out that NetApp had just passed EMC in terabytes of "networked storage" shipped.

That is true, but it also raised several questions. One blogger pointed out that Dell sells EMC storage, and that EMC's number would be bigger if you included that. Another reader pointed out a press release that said, "HP Climbs to No. 1 Position in Total External Disk Storage Systems", and asked the difference between that claim and mine.

Whenever you look at market share, some questions to consider are:

1. What market should you look at? (Networked Storage or all External Storage Systems?)
2. Which vendor gets credit when there is a partnership? (EMC or Dell?)
3. What should you measure? (Terabytes or Dollars?)

Non-technical examples make things more intuitive. To compare car companies, should you count only sedans, or should you include minivans and 18-wheelers? Usually it's best to define a market in ways that capture "natural customer behavior". What alternatives would a customer normally consider together? You would expect a parent looking for a family car to consider both sedans and minivans, but not 18-wheelers or bicycles. Should you count dollars or cars? Rolls-Royce collects lots of dollars, but they don't sell many cars. It's not that a particular answer is right or wrong, but you learn different things by looking at data in different ways.

I defined Networked Storage to exclude mainframes and DAS (direct attached storage) because mainframe storage and DAS feel different from SAN, NAS and iSCSI in the same way an 18-wheeler feels different from a car. People buying mainframe storage wouldn't even contemplate iSCSI or NAS, but people buying SAN often do. Why does HP rank so high for storage overall? In the past year they sold over $3 billion in DAS—over $2 billion in systems that cost less than $5k. See what I mean about DAS feeling different than Networked Storage? This is mostly disks bundled with windows servers. Barely any networked storage even sells for less than $5k.

Another tricky question is how to handle partnerships. When Dell sells a CX300, should Dell get credit or should EMC? IDC always reports numbers according to who sold the system, so they give Dell the credit. This makes sense if you consider markets from the perspective of sales channels. Dell "owns" the customer, so Dell gets the credit. On the other hand, technology people are often more interested in the technology, so they would rather give EMC the credit. I went through IDC's data product by product to figure out who actually built the technology. Lots of companies sell other companies' storage, but the big ones are Dell selling EMC, HP selling Hitachi, and IBM selling Engenio, all over half a billion in the past year.

To help understand the storage market, I built the chart below. It ranks storage companies according to who sells the storage (Vendors) and also according to who provides the technology (Tech Suppliers). It measures vendors and tech suppliers both by revenue, because dollars are always important, but also by terabytes, because that indicates how much customer data is actually being stored. Finally, I added a "blended" score that gives equal weight to each of the other four metrics. (All of this is based on IDC's 2006Q2 data, and includes SAN, NAS and iSCSI, but excludes DAS and mainframe.)

You can see that EMC (dark blue) is #1 for every metric except "vendor terabytes", where NetApp (yellow) is very slightly higher. EMC wins by the most in "technology supplier revenue", because that includes EMC storage sold by other companies like Dell.

These rankings tell an interesting story about companies and their strategies. IBM, Dell and Sun all drop dramatically from Vendor to Tech Supplier because they sell so much of other people's storage. EMC and Hitachi go up. Engenio sells only through partners, so they don't show up at all as a vendor. EMC's position in the market allows them to charge a premium price, so they score especially high when you measure by dollars, but lower when you look at how many terabytes the customer gets.

The blended metric puts NetApp in third place, pretty close to HP, but both of the dollar-based rankings put us in fourth place, so I certainly wouldn't claim that NetApp is #1 overall! What got me excited about the new IDC numbers was that NetApp had passed EMC by any broad market share measure.

Here's the message that our terabyte ranking should send to EMC and HP:

Warning: Objects in mirror are closer than they appear.

[All numbers are from IDC's "Worldwide Quarterly Disk Storage Systems Tracker, Q2 2006 Release", August 2006. The "tech supplier" numbers are based on my own categorization of product lines. IDC does not break data out this way.]