Strong Hyperscale Market Dominates Lackluster OEM Storage Demand

This article was written by John Chen, VP and chief analyst at Trendfocus, Inc. and posted December 5, 2017.

Trendfocus reported that 3CQ17 enterprise storage device shipments of HDDs and SSDs posted solid exabyte growth as major cloud and hyperscale customers continue the current cycle of expansion.

Capacity enterprise, or nearline, HDDs that provide cost-effective bulk storage increased capacity shipped by 10% Q/Q with major U.S. hyperscale vendors driving 10TB models to over 30% of nearline HDDs shipped.

As a result, 10TB HDDs also represented over 50% of nearline exabytes in the quarter and over 40% of all enterprise HDD and SSD capacity shipped in 3CQ17. Enterprise HDDs as a whole generated $2.4 billion, rising just 4% from the prior quarter due to the contraction of performance enterprise HDD market, which offset the hyperscale-driven growth of nearline HDDs.

While enterprise SSD units declined sequentially, total capacity shipped lifted by more than 5% Q/Q, illustrating the average capacity growth of SSDs across all interfaces. The PCIe interface – SSDs that are nearly all utilizing the NVMe protocol – was the one category that posted both sequential unit and exabyte growth and, driven also by major expansion of storage by hyperscale customers. Revenue from all enterprise SSDs reached $3.2 billion, or a 4% sequential rise.

“Lackluster storage demand from traditional server and storage OEMs appeared was evident in CQ3, as seen with sequential unit reductions in performance enterprise HDDs, lower capacity nearline models, and SATA and SAS SSDs. Major hyperscale companies, on the other hand, are in the midst of the latest expansion cycle – one that should continue through the end of 2017. 2018 promises to continue strong cloud storage demand growth as NAND supply and demand returns to a state of balance, and as hyperscale customers begin the transition to 12TB and, in some cases, 14TB nearline HDDs over the course of next year,” stated Chen.