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Consider the facts.

IBM revenue from storage systems decreased 11% YoY when it last announced results. Earlier in the year Dell recorded a 13% YoY decline in storage and HP a similar 13%. Even pure play storage providers like NetApp recorded a 2% decline in product revenues YoY.

I am sure there is a combination of factors contributing, the economy and sales execution to name a few.  However, when multiple industry bellwethers record double digit declines over a period, there is a more fundamental shift at hand.

It’s the Cloud, stupid!

I am in the unique position to see this play out everyday.  Over the last few years the cloud has evolved from curiosity to credible business alternative, and adoption has moved from small businesses to mid market and enterprises.  IT likes the idea of renting and having someone else deal with the burden of management instead of lining up a big capex check and dealing with ongoing management.

I see many inflection points where companies leverage cloud for storage:

  • Growth: As companies open new offices they are asking– why not cloud?  Can IT provide the productivity and service levels to the business without the capex?  Can IT leverage cloud as a tier to support growth?
  • End of Life: The same question gets asked when existing storage goes “end of life”.  I see companies shifting to the cloud or extending current storage investments longer than go through a traditional refresh cycle.
  • Mobility: I see sales forces and field organizations moving to tablets as primary devices. With this comes the need to store and access data in a mobile friendly manner, where traditional storage fails.  This is shifting storage to the cloud.

Therefore, it’s not surprising to see enterprise storage sales shrinking.  As cloud becomes mainstream firms are purchasing less from the likes of IBM, NetApp, Dell or HP. I don’t see us turning back.

Does this mean the future is all in the cloud; that it’s doom and gloom for the enterprise storage industry with slow to declining growth and market consolidation?  Pursuing that thought is worthy of a much longer discussion that I will take up in a future post.

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