Booming software-defined-storage market set to reach $86 billion by 2023

March 18, 2020 - LONDON, UK: The software-defined-storage (SDS) market is expected to register a 28 percent compound annual growth rate (CAGR) from 2019 through 2023 to reach $86 billion as vendors expand SDS product offerings to meet rising demand, according to Omdia.

As storage capacity grows due to the accumulation of data for video, big data, data analytics, artificial intelligence and machine learning, an increasing portion of data center (DC) storage spend is expected to shift towards SDS storage, which is suited for this new type of data retention and processing.

The SDS market comprises hyper-converged infrastructure (HCI) and standalone SDS products.

“HCI has become a runaway hit because of its ease of deployment and ongoing operation,” said Dennis Hahn, principal analyst, data center storage, cloud and data center research practice, at Omdia. “HCI represents an affordable way to add capacity, with small enterprises able to configure and manage the technology using generalists on their staff. Many enterprises like HCI as a pragmatic solution for meeting their immediate growth challenges. In contrast, a core data center storage solution would likely entail the use of skilled administrators to conduct equipment integration into the data-center infrastructure.”

HCI shipments are estimated to have grown 24 percent year-on-year (YoY) in 2019, achieving a 56 percent, five-year CAGR in 2023. Meanwhile, standalone SDS (non-HCI) shipments grew 12 percent in 2019, to achieve a 21 percent five-year CAGR in 2023.

Furthermore, HCI is forecasted to reach $43 billion by 2023, rising at a five-year CAGR of 47 percent, whereas standalone SDS is forecasted to reach $42 billion by 2023 for a five-year CAGR of 18 percent, according to Omdia’s Data Center Software Defined Storage Market Tracker.

In the second quarter of 2019, HCI revenue totaled $1.9 billion, up 27 percent YoY and standalone SDS amounted to $4.3 billion, down 12 percent YoY. Furthermore, factory-defined comprised 33 percent of the standalone SDS market in terms of units during the same period, with file was at 42 percent, object at 20 percent, block at 18 percent, all-in-one at 13 percent and unified at 7 percent.

Cloud service providers contributed 43 percent of total SDS revenue in 2019. In contrast, telco service providers contributed a mere 4 percent.

Slow but steady rise in the adoption of standalone SDS storage

Standalone SDS storage has been slower to take off in the enterprise, although it provides lower costs than traditional storage and allows independent server and storage scaling. Slowing standalone SDS adoption has been attributed to a lack of standards to help users marry their independent choice of SDS hardware to SDS software. However, as compatibility issues are worked out, standalone SDS is expected to gain increasing market traction.

Standalone SDS separates the purchasing of storage hardware from the software, providing choices for buyers. Hardware options come with multi-vendor sourcing, allowing users to hunt for options and enhance bargaining power.

Cloud service providers have been fully committed to SDS for several years because they have the in-house skills to make it work. Enterprises are just beginning to seriously try the approach, often as an appliance offering, to assess its payback.

During the next four years, vendors are expected to increasingly drive up performance to further enable compatible hardware/software options. Standards, such as those developed by the Open Compute Project, allow for the creation of storage solutions that provide consistent storage deployment and associated support, hence reducing the level of skills required.

Highlights from the Data Center Software Defined Storage Market Tracker report include:

• HCI is forecasted to reach $43 billion by 2023, for a five-year CAGR of 47 percent.
• Standalone SDS is forecasted to reach $42 billion by 2023 for a five-year CAGR of 18 percent.
• HCI revenue was $1.9 billion, up 27 percent year-over-year in the second quarter of 2019 and standalone SDS was $4.3 billion, down 12 percent year-over-year.
• Factory-defined represented 33 percent of standalone SDS units in the second quarter of 2019, with file (42 percent), object (20 percent), block (18 percent), all-in-one (13 percent), and unified (7 percent) by access method.
• Cloud service provider accounted for 43 percent of total SDS revenue in 2019, telco service provider was 4 percent, and enterprise was 53 percent, with enterprise going to 65 percent in 2023.