AWS #3 Storage Vendor in 2018, #1 in 2020
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AWS is estimated to be the #3 enterprise storage vendor by revenue in 2018, with storage revenue estimated between $1.1-1.486 billion in Q4 2018. By extrapolating AWS's 52% market share of the IaaS market to the storage-as-a-service market, and estimating that 15-20% of AWS's revenue comes from storage, AWS is calculated to have overtaken traditional storage vendors by revenue. If AWS maintains 35-45% annual growth, it is projected to become the #1 storage vendor by 2020, with over $3 billion in storage revenue, cementing its position as a top storage leader through sustained large investments in R&D.
AWS #3 Storage Vendor in 2018, #1 in 2020
- 1. AWS #3 StorageVendor in 2018 | #1 in 2020 Industry Brief
- 2. There's a lot of data published every day about the revenue and growth rate of the enterprise storage vendors, and about the overall growth rate for public cloud Infrastructure-as-as-Service (Iaas) providers. But to the best of our knowledge, no one has published estimates of how much revenue the cloud service providers derive from storage, and where that places them in the rankings of storage leaders. IT Brand Pulse thought it would be interesting, and relevant to storage industry watchers, to know how far the cloud service providers have climbed in the rankings, so we crowd-sourced the data needed to do the job.The bottom line is that we estimate AWS is the #3 enterprise storage vendor by revenue today, and will be #1 in 2020. Read on to see how we calculated our results.
- 3. Data from IDC defines the rankings of storage system leaders.These are the storage systems you find in every data center that are being displaced a little every year by Storage-as-as- Service (STaaS). After years of slow growth, some traditional storage leaders enjoyed healthy growth in Q4 2018. Top 5 Companies,WorldwideTotal Enterprise Storage Systems Market, Fourth Quarter of 2018 (Revenues are in US$ millions) Company 4Q18 Revenue 4Q18 Market Share 4Q17 Revenue 4Q17 Market Share 4Q18/4Q17 Revenue Growth 1. Dell Inc. $2,987.6 20.6% $2,603.1 19.3% 14.8% 2. HPE/H3C $2,606.3 18.0% $2,592.0 19.2% 0.6% T3. NetApp $842.3 5.8% $735.3 5.4% 14.6% T3. IBM $698.5 4.8% $746.9 5.5% -6.5% T5. Huawei $579.7 4.0% $514.6 3.8% 12.6% T5. Lenovo $501.8 3.5% $306.1 2.3% 63.9% T5. Hitachi $483.6 3.3% $453.1 3.4% 6.7% ODM Direct $2,722.8 18.8% $2,764.3 20.5% -1.5% Rest of Market $3,072.9 21.2% $2,782.2 20.6% 10.4% Total $14,495.5 100.0% $13,497.7 100.0% 7.4% Source: IDC Worldwide Quarterly Enterprise Storage Systems Tracker, March 7, 2019.
- 4. We then searched for data about Cloud Services Revenue. According to Gartner, cloud services revenue is booming with the highest growth rate in the IaaS sector.We still need to determine the size of the STaaS market, which is a subset of these IaaS projections, but this Gartner forecast defined a 2016-2020 growth rate that we can use for STaaS. Worldwide Public Cloud Services Revenue Forecast ($B) 2017 2018 2019 2020 2021 Cloud Business Process Services (BPaaS) 42.2 46.6 50.3 54.1 58.1 Cloud Application Infrastructure Services (PaaS) 11.9 15.2 18.8 23.0 27.7 Cloud Application Services (SaaS) 58.8 72.2 85.1 98.9 113.1 Cloud Management and Security Services 8.7 10.7 12.5 14.4 16.3 Cloud System Infrastructure Services (IaaS) 23.6 31.0 39.5 49.9 63.0 Total Market 145.3 175.8 206.2 240.3 278.3 https://www.gartner.com/en/newsroom/press-releases/2018-08-01-gartner-says-worldwide-iaas-public-cloud-services-market-grew-30-percent-in-2017
- 5. 28% 24% 18% 17% 13% 8% 0% 5% 10% 15% 20% 25% 30% IaaS PaaS SaaS Mgt & Security Total Market BPaaS Compound Annual Growth Rate by Cloud Service Category, 2017-2021 https://www.gartner.com/en/newsroom/press-releases/2018-08-01-gartner-says-worldwide-iaas-public-cloud-services-market-grew-30-percent-in-2017
- 6. In late 2018 Gartner published rankings for overall IaaS revenue market share which we used to extrapolate STaaS market share. According to Gartner, AWS owns over half the IaaS market, and we believe it is reasonable to assume AWS has similar market share for STaaS. 52% 13% 5% 3% 2% 25% 0% 10% 20% 30% 40% 50% 60% Amazon Microsoft Alibaba Google IBM Others MarketShare https://www.gartner.com/en/newsroom/press-releases/2018-08-01-gartner-says-worldwide-iaas-public-cloud-services-market-grew-30-percent-in-2017
- 7. IT Brand Pulse estimates that AWS storage revenue is between 15 and 20% of overall revenue. On the following slides are actual AWS revenue numbers published by Amazon along with numbers for AWS storage revenue at 15% of overall revenue and 20% of overall revenue. Based on the revenue reported by Amazon forQ4 2018 and our estimates, AWS storage revenue was between $1.1 billion and $1.486 billion in Q2. That is an annual storage run-rate of $4.4 to $5.944 billion…and growing rapidly.
- 8. Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 AWS Revenue $1,050 $1,005 $1,169 $1,420 $1,566 $1,824 $2,085 $2,405 $2,566 $2,866 $3,231 $3,536 $3,661 $4,100 $4,584 $5,113 $5,442 $6,110 $6,680 $7,430 STaaS @15% $158 $151 $175 $213 $235 $274 $313 $361 $385 $430 $485 $530 $549 $615 $688 $767 $816 $917 $1,002 $1,115 STaaS @20% $210 $201 $234 $284 $313 $365 $417 $481 $513 $573 $646 $707 $732 $820 $917 $1,023 $1,088 $1,222 $1,336 $1,486 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Millions
- 9. $1,486 $371 $143 $86 $57 $714 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Amazon Microsoft Alibaba Google IBM Others STaaSMarketShare Source: Gartner, Worldwide IaaS Public Cloud Services Market Share, and IT Brand Pulse Combine the Gartner IaaS market share estimates with our estimate that up to 20% of IaaS revenue comes from storage, and you get a Q4 STaaS TAM of $2,587B. The following chart showing STaaS revenue and rankings for Q4 18.
- 10. In the next slide we put the estimated AWS Q4 storage revenue of $1.1 to $1.46 billion into the IDC storage rankings we looked at earlier and "Voila!" you see that AWS is today a solid #3 in enterprise storage revenue.The gaudy AWS growth rate stands out and provides a strong hint that we should not expect AWS to stay at #3 for long.
- 11. Top 5 Companies,WorldwideTotal Enterprise Storage Systems Market, FourthQuarter of 2018 (Revenues are in US$ millions) Company 4Q18 Revenue 4Q18 Market Share 4Q17 Revenue 4Q17 Market Share 4Q18/4Q17 Revenue Growth 1. Dell Inc. $2,987.6 18.7% $2,603.1 17.9% 14.8% 2. HPE/H3C $2,606.3 16.3% $2,592.0 17.8% 0.6% AWS $1,486 9.3% $1,023 7.0% 45.2% T3. NetApp $842.3 5.8% $735.3 5.1% 14.6% T3. IBM $698.5 4.8% $746.9 5.1% -6.5% T5. Huawei $579.7 4.0% $514.6 3.5% 12.6% T5. Lenovo $501.8 3.5% $306.1 2.1% 63.9% T5. Hitachi $483.6 3.3% $453.1 3.1% 6.7% ODM Direct $2,722.8 18.8% $2,764.3 20.5% -1.5% Rest of Market $3,072.9 21.2% $2,782.2 19.0% 10.4% Total $15,981 100.0% $14,520.7 100.0% 7.4% Source: IDC Worldwide Quarterly Enterprise Storage Systems Tracker, March 7, 2019 and IT Brand Pulse
- 12. 69% 43%43% 47% 49% 81% 78% 69% 64% 58% 55% 47% 43% 42%42% 44% 48% 49% 46%45% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 AWS raced to a third place rankings by riding the massive IaaS wave the last several years. We searched for ways to validate the Gartner growth trajectory, and found data about their history of growth and about their investment in R&D. While not growing at 80% per year anymore, AWS is seeing steady growth above 40% the last several quarters. This gives us confidence we can count on another year or two of over 40% per year growth. Upswing in Growth
- 13. https://www.bloomberg.com/view/articles/2018-04-05/amazon-s-technology-and-content-spending-a-huge-gift-to-economy 10.2 10.6 11.5 12.1 13.1 13.9 14.8 14.9 16.6 22.6 0 5 10 15 20 25 Merck Johnson & Johnson Roche Apple Intel Microsoft Volkswagen Samsung Alphabet Amazon $Billions Spent on R&D If R&D investment is the key to sustaining over 40% per year growth, then you can bet the farm because no one, I mean no one, invests more in R&D than Amazon.According to Bloomberg, Amazon spent over $22 billion on R&D in 2017, 36% more than Google, and 62% more than Microsoft.
- 14. Q4 18 (actual) YoY (est.) Q4 19 (est.) YoY (est.) Q4 20 (est.) YoY (est.) Q4 2021 (est.) Dell EMC $2,988 10% $3,287 10% $3,615 10% $3,977 HPE $2,606 0.6% $2,622 0.6% $2,637 0.6% $2,653 AWS $1,487 45.00% $2,156 45.00% $3,126 45.00% $4,533 AWS $1,487 40.00% $2,082 40.00% $2,914 40.00% $4,080 AWS $1,487 35.00% $2,007 35.00% $2,710 35.00% $3,658 Trajectory with DifferentYear overYear Growth Rates In the model below, we estimated that the growth rate for Dell storage would be strong through 2021, HPE would see almost zero growth as in 2018, andAWS would enjoy from 35% to 45% annual growth. Only if Dell EMC growth remains at 10% and AWS growth decelerates to 35% per year, does Dell remain #1. It is more likely that AWS will race past the pack in 2020 while sustaining with 40% growth and driving over $15 billion in annual storage revenue.
- 15. Your Feedback is Appreciated If you have information that can make these estimates more accurate, we welcome your feedback and will publish updates if we get data that significantly changes this analysis. frank.berry@itbrandpulse.com