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Go and whistle, IDC. The storage world's going to hell in a handbasket

A storage bear growls

Comment Data volumes are growing like crazy and yet there's a case to be made that 2016 is going to be a tough old year for storage, and could be an annus horribilis* and not an IDC prediction-fuelled glory year.


Yes, really. Try this argument on for size.

South America is in a dreadful economic state. Brazil is over-spent and in the throes of a massive government-oil industry corruption scandal. Argentina is over-spent and faces paying vulture investors billions in a bond fight. Venezuela is run by an economic madman who's made it impossible for Venezuelans to reliably wipe their arses with toilet paper, and whose state oil revenues have crashed.

So Latin America's IT kit buying power is generally screwed.

The Middle East is riven by the Syrian civil war, Sunni and Shi'ite unrest, ISIS terrorism, millions of displaced refugees, and Saudi Arabia manufacturing an oil glut to screw fracking and Iranian oil revenues, and, coincidentally, the rest of the world's oil revenues.

Are you listening, Russia?

Africa is, well, basically Africa, with endemic corruption and mis-rule.

Europe is struggling with refugees, an on-going Euro problem as southern states get squeezed by northern ones fed up with bailing them out, and oil-rich economies, sort-of, like the UK and Norway, find their revenues squeezed by the Saudis playing geo-politics.

So the EMEA's buying power is getting screwed.

China's boom is winding down as the country's investing and house-buying middle classes find they are getting screwed. The country has foreign exchange problems as well so it isn't going to be buying so much foreign IT kit this year.

So that's APAC's buying power getting constrained.

The energy sector: all those oil suppliers and oil infrastructure suppliers and sub-suppliers world wide, are getting royally screwed by Saudi Arabia. A whole industry, a massive section of the world economy, is contracting. An example; BP in the UK has just announced 7,000 job losses.

Get the picture? The geo-political situation and Saudi Arabia's oil glut-induced price fall will mean substantially less IT kit is bought this year.

What does that mean for storage?

First, revenues are generally going to fall and firms will contract to save costs. Thus week we have seen Panasas and Tegile affected in this way.

The El Reg grizzly bear growls that IT-buying customers will spend less and will spend it on IT kit or services that substantially reduce its costs. So any vendor punting kit or services that do this, that enable costly, on-premises kit to be thrown out, will have a better chance of winning business.

That means that incumbents with legacy storage arrays coming up to lease-end, or where their running costs are unsustainable for customers, face getting booted out by cheaper all-flash arrays, hybrid arrays, converged systems, hyper-converged infrastructure, and the public cloud. That's five threats, solid threats because the suppliers in all these areas have momentum behind them, apart from a few lost causes.

My predictions

  1. Dell, EMC, HP, IBM, Fujitsu, and NetApp legacy arrays will see revenue falls as customers choose cheaper and better alternatives.
  2. Second and third tier storage array vendors who are struggling to grow will face collapse unless their strategy for replacing incumbents or winning new business is rock-solid.
  3. Vendors with high prices, like Oracle, will face a lot of customer resistance.
  4. Speculative storage products with no guaranteed cost-saving or profit-enhancing result from their deployment – think Big Data and analytics – will see restricted growth and even falling sales.
  5. The storage supply industry could see thousands of layoffs and the battening down of non-critical spending hatches.. Thinking about a Las Vegas customer event or European road-show? Think again.
  6. Publicly owned storage supplier share prices will fall and activist investors will get more active.

That's enough I think. Do you reckon this forecast misery is real or am I smoking pot, listening to Donald Trump too much or what? Tell me, do, because I'm weeping and need cheering up. ®

* Annus horribilis is Latin for miserable year but sounds gleefully like horrible ass. I like that.


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