A leading provider of information infrastructure solutions, EMC Corp. (EMC) maintained its leading market share position in external disk storage systems for the fourth quarter ended December 31, 2010.
According to latest data from research group IDC, EMC’s market share was 26.0% in the fourth quarter, compared to its closest rival International Business Machines (IBM) 16.3%. Hewlett Packard Co. (HPQ) was #3 with 11.6%, followed by NetApp Inc. (NTAP) 10.3%, Hitachi Data Systems 8.7% and Dell Inc. (DELL) 7.9%.
EMC earned external disk storage systems revenues of $1.58 billion in the quarter, up 26.3% year over year. However, NetApp (up 43.7%) and Hitachi (up 29.7%) saw revenue increase at a faster rate on a year-over-year basis. We expect EMC to face tough competition, particularly from NetApp in fiscal 2011, considering its position in the small and medium business (SMB) segment.
Overall, external storage system revenue was $6.1 billion, up 16.2% year over year in the fourth quarter. According to IDC, this is the 14th consecutive year that EMC has led the external disk storage systems market in terms of both revenue and terabytes shipped.
In fiscal 2010, external storage system revenue increased 18.3% year over year to $21.22 billion. EMC maintained its #1 position with revenue of $5.44 billion (up 32.5% year over year) and a market share of 25.6%. IBM was #2, with a 13.8% market share in 2010.
Total disk storage systems revenues were up 14.3% from the previous year. NetApp’s revenue shot up 43.7% year over year in 2010, beating EMC’s growth rate of 26.3%. Dell was #3 and achieved a growth of 19.2% in the same period, whereas Hewlett Packard was at #4, with revenue growth of 10.2%.
However, despite weak revenue growth, Hewlett Packard was the joint leader with EMC in terms of market share in fiscal 2010. Both the companies had a market share of 19.2%, compared to IBM at #3 with 18.5% market share. Dell was #4 with 10.9% market share in the year, whereas NetApp achieved the #5 position with a 7.6% market share.
In January 2011, EMC unveiled more than 40 new products and technologies addressing the fastest growing areas of the industry, including big data and cloud computing.
Our Take
Given the high adoption of virtualized environments as well as increased competition among service providers, it has become imperative for competing firms to acquire additional tools and capabilities to gear for an extended virtualized environment. This will no doubt increase focus on data storage capabilities going forward.
We expect strong demand from end users and vendors as information technology investment remains robust. In our view, EMC with its latest data storage and upgraded software offerings will continue to lead the pack.
However, EMC continues to face aggressive competition in the storage, networking and virtualization space from system vendors such as International Business Machines, NetApp, Hewlett-Packard Co., Unisys Corp. (UIS) and Hitachi Data Systems.
Currently, EMC has a Zacks #3 Rank, which translates to a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock.
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