India's banks boosting data storage market as industry revives after a year

Demonetisation and GST had dented the sector

After a year of subdued growth, finally, the data storage market is coming to life – thanks to India’s banks. According to the latest data from analyst firm IDC, India’s external data storage systems market grew over 12 per cent during the March quarter. Most of this growth has come from the country’s robust banking system as it rapidly adapts to changing data storage patterns and trying to catch up with a wave digitisation.

Numbers from IDC show that the market witnessed a strong growth during January-March 2018 at Rs 5.8 billion – up 12.7 per cent year-on-year (y-o-y). And the All Flash Arrays (AFA) segment saw a growth of 87.4 per cent y-o-y, contributing 30.9 per cent to the overall external storage market.

The revival in growth comes after a gap of over a year after the market suffered due to demonetisation. In the run-up to the implementation of goods and services tax (GST), the segment witnessed further turmoil as India Inc struggled to overhaul its operations and logistics.

However, as the dust settled in late 2017, sectors that now deal with data more than ever before started investing heavily in external data storage devices and services. According to IDC, other than the banking system, sectors such as professional services, manufacturing, telecommunications and government have contributed heavily to the space. In aggregate, these sectors, along with banking, account for over 80 per cent of the external storage systems market in the country.

Organisations are witnessing significant data growth, but challenges for IT budgets to obtain traditional hardware remain. Firms are considering technologies to help data optimisation and consolidation as ways to overcome this difficulty,” says Dileep Nadimpalli, Research Manager, Enterprise Infrastructure, IDC India. “Organisations are actively considering flash options and are willing to pay the additional price premium to avail best in class performance”, IDC noted in regard to the AFA segment. 

The mid-range storage segment, that forms 58 per cent of the market, witnessed a significant growth due to large banking and professional services deployments.

While all major vendors have benefitted from the spurt in growth, market leader Dell, however, lost significant market share to its competitors like HP and NetApp. Dell’s market share plunged to less than 30 per cent from close to 45 per cent a year ago, whereas HP’s went up to 23 per cent from 16 per cent in March 2017. Third largest player IBM’s share remained flat at 15 per cent, but NetApp gained four percentage points to end the quarter at 15 per cent.

The external enterprise storage systems market is expected to grow at a single-digit compounded annual growth rate (CAGR) in the 2017-22 period, which would be driven across industries, and led by spending digital transformation initiatives.