Storage User Demand Study, 2014 Spring Edition

Survey Storage User Demand Study, 2014 Spring Edition Natalya Yezhkova IDC OPINION The enterprise storage systems industry is being disrupted in a number of ways, which include demand for new types of storage architectures, services, and even system suppliers. IDC's recent survey of 1,000+ end users around the world completed as part of the biannual Storage User Demand Study (SUDS) Survey was focused on one of these trends utilization of servers for storage-related functions and the ways this deployment model changes the system procurement process. Key findings from this survey include: Respondents expect to increase share of servers dedicated to file/storage in their overall onpremises storage infrastructures (from the overall storage capacity perspective). More than a quarter of storage capacity within servers is deployed on servers dedicated to file/storage services. Another third is deployed on servers sharing compute and storage workloads. The ratio will remain similar for server purchases within the next 12 months. More than half of respondents embracing deployment of servers for file/storage services plan to see increase in purchases of servers with high HDD/SSD attach rate (48+ drives), and nearly a third consider purchasing servers from original design manufacturers (ODMs). Cost savings, flexibility, and scale of the IT environment are the top 3 reasons for deployment of servers dedicated to file and storage services. November 2014, IDC #252418

IN THIS STUDY This study provides an analysis of the major findings from the survey of storage administrators around the world completed in spring 2014 as part of IDC's biannual Storage User Demand Study. The survey focuses on analyzing current and future deployments of enterprise storage systems for particular data uses ranging from major enterprise applications to various segments of the IT infrastructure support to storage infrastructures within public cloud datacenters. Results of the previous survey were published in Storage User Demand Study, 2013 Fall Edition: Rising Adoption of Flash Storage (IDC #250106, August 2014). Methodology The Storage User Demand Study was launched by IDC in 2010, with a goal to expand the traditional vendor-centric view of the enterprise storage systems market into a more deployment-oriented view, which provides essential insights into how storage systems are used for a variety of use cases and types of data. This part of the analysis is applied to the results published in IDC's Worldwide Quarterly Disk Storage Systems Tracker and annual enterprise storage systems forecast to produce detailed sizing of market segments covered by the study as well as estimate the positioning of top system vendors within these segments. To obtain end-user insights critical for this analysis, IDC conducts a biannual survey of 1,000+ storage administrators across the globe. These surveys provide essential details on current and future deployments of storage systems as well as more forward-looking opinions of end users about emerging technologies or market developments. Some of these developments analyzed during the course of the four-year study included all such hot topics as the adoption of third-party storage services (including public and private clouds) and the adoption of flash storage. The survey discussed in this document was devoted to deployments of storage within servers (internal storage) for a variety of data use cases. The majority of the content in this document is related to findings on this topic. The Appendix provides detailed information on the respondent demographics. Overall, 1,035 respondents from 24 countries participated in the spring 2014 survey. Note: All numbers in this document may not be exact due to rounding. Definitions To align survey respondents with IDC's terminology related to storage systems, the following definitions were offered in the survey: Internal storage: Storage (HDDs and/or SSDs) deployed within an application or generalpurpose server and used for storing data (not just for running an operating system) (Examples include HP ProLiant or Dell PowerEdge servers with HDDs and/or SSDs used for storing data.) 2014 IDC #252418 1

External storage: A standalone storage system that is connected to a network (Ethernet, Fibre Channel, or InfiniBand) or connected directly to servers (Examples include but not limited to storage systems from EMC [VMAX, VNX, or Isilon], NetApp [FAS], or HDS [VSP, HUS].) We explicitly removed IDC's taxonomical reference to three or more drives to ensure that respondents provide information about their overall deployments of storage within servers, whether these are servers with one, two, or three or more media devices (SSDs and/or HDDs). Respondents were also asked to identify for what category of workloads servers are deployed in their organization. Respondents were asked to provide splits for the following three categories: Dedicated to running applications (including enterprise applications, database, email, and Web servers) Used for running applications and for file/storage services on the same server (if you use server-based appliances like Hadoop or Nutanix, please include them into this category) Dedicated to file/storage services SITUATION OVERVIEW The sections that follow provide detailed analysis of the key findings from the survey as well as present top-level estimates of storage system vendor ranking in various data use cases covered by SUDS. Survey Analysis The survey covered a broad range of organizations in various regions. Several figures in the Appendix provide insights on the diversity of respondents from the perspectives of company size, region, and vertical industry. Despite this diversity, respondents provided fairly close assessments of their organizations' storage assets deployed within servers compared with external storage system deployments (see Figure 1). As shown in Figure 1, respondents tend to have fairly balanced environments in terms of distribution of storage capacity between servers and storage the larger the former, the larger the latter. While at first look this might sound counterintuitive, one important point to keep in mind is that we asked respondents to provide details about all servers, not only those with three or more HDDs/SSDs, which are considered servers with internal storage by IDC's current storage systems taxonomy. 2014 IDC #252418 2

FIGURE 1 Installed Storage Terabyte Capacity Within Servers Versus External Storage Systems Q. How many raw terabytes of external enterprise storage is currently deployed in your organization (not including storage purchased as a service from a service provider)? Q. How many terabytes of combined raw storage capacity is deployed on servers? (Servers currently deployed in the organization.) In fact, as shown in Figure 2, the majority of currently deployed servers have "light" HDD attach ratios ranging from zero to four drives. In average, about 44% of servers are deployed with five or more drives, with 7% being servers with a high-density storage attach rate of more than 48 drives. 2014 IDC #252418 3

FIGURE 2 Current Server Configurations by HDD/SSD Attach Rate Q. Please indicate in what proportions these servers are split by HDD/SSD attach rate. (Servers currently deployed in the organization.) (Sum of mean.) Utilization of these servers for three general groups of use cases (dedicated to running applications, shared between running applications and file/storage services, and dedicated to file/storage services) as defined previously is largely aligned with HDD/SSD attach rates, especially for servers with lighter (<24 drive) attach rate (see Figure 3). 2014 IDC #252418 4

FIGURE 3 Allocation of Current Deployed Servers to Applications, Applications/Storage, and File/Storage by HDD/SSD Attach Rate Q. What are the servers with different HDD/SSD attach rates used for? (Select all that applies.) When it comes to the overall storage capacity deployed on these servers, consistent with the previous SUDS Survey on internal storage, servers dedicated to running applications take a decent lead (see Figure 4). In average, 41% of the overall storage capacity within organizations' servers is deployed in servers dedicated to running applications, 33% in servers used for both application and file/storage functions, and 26% in servers dedicated specifically for file/storage functions. For servers that respondents expect to purchase in the next 12 months, this ratio remains largely unchanged, with just a 1% move from the servers sharing applications and file/server functions to servers dedicated to file/storage. 2014 IDC #252418 5

FIGURE 4 Allocation of Storage Capacity Within Currently Deployed Servers and Servers to be Deployed in the Next 12 Months to Application, Applications/Storage, and File/Storage Q. Approximately, what percentage of x terabytes of storage capacity installed on servers is installed for these types of servers? (Sum of mean.) Q. How will this storage capacity be split between servers dedicated to running applications, servers used for running applications and for file/storage services on the same server, and servers dedicated to file/storage services? (Servers planned to be purchased in the next 12 months.) (Sum of mean.) Small businesses (organizations with fewer than 100 employees) tend to allocate a larger share of server-based terabytes to file and storage functions than do medium-sized and large organizations (see Figure 5). While the overall sample of small businesses in the survey was intentionally low, we believe that this practice is common in small companies because, in general, they tend to deploy more server-centric infrastructures in their datacenters. Midsize businesses (with 100 999 employees) as a group, on the other hand, utilize a broader range of approaches to the datacenter design and infrastructure deployment types. Respondents from this group expect that a third of terabytes that they will purchase in the next 12 months with servers will be deployed on systems dedicated to serving files and storage functions about a 3% increase compared with current server terabyte deployments. Large businesses (with 1,000+ employees) expect the ratio to remain stable at 25%. Large businesses tend to lean more toward external storage solutions for their storage needs, so the lower ratio is a natural extension of this trend. 2014 IDC #252418 6

FIGURE 5 Allocation of Storage Capacity Within Servers to be Deployed in the Next 12 Months to Applications, Applications/Storage, and File/Storage by Company Size Q. How will this storage capacity be split between servers dedicated to running applications, servers used for running applications and for file/storage services on the same server, and servers dedicated to file/storage services? (Servers planned to be purchased in the next 12 months.) (Sum of mean.) Note: Small businesses have <100 employees, medium-sized businesses have 100 999 employees, and large businesses have 1,000+ employees. At the same time, large businesses are ahead of other respondents in deploying servers with higher HDD/SSD attach rates for storage-dedicated functions (see Figure 6). It's driven by usually higher demand for storage capacity within large organizations coupled with efforts to maximize utilization of the available datacenter footprint. 2014 IDC #252418 7

FIGURE 6 Preferable Configuration for Servers Deployed for File/Storage in the Next 12 Months by Company Size Q. What will be the primary configuration (in terms of HDD/SSD attach rate) of servers used for running applications and for file/storage services on the same server and dedicated to file/storage services? (Select up to three primary configurations.) Note: Small businesses have <100 employees, medium-sized businesses have 100 999 employees, and large businesses have 1,000+ employees. The trend toward purchasing servers with high attach rate will extend even further as stated by respondents tuned into adoption of servers dedicated for storage functions (see Figure 7). Half of midsize businesses and nearly 60% of large businesses deploying servers dedicated to file and storage functions indicated that they plan to do so. Another important impact from this server deployment model is consideration to purchase products from original design manufacturers. While responses don't necessarily indicate that end users have strong plans to purchase products from ODMs, the level of awareness about this channel is certainly decent. Intents are especially high among respondents from the APJ region, which is a home for most of the ODMs (see Figure 8). APJ respondents were also in a lead with regard to expanding their plans on purchasing servers with high HDD/SSD attach rate. Respondents from Americas, on the other hand, were the most conservative in estimating the overall impact of installation of servers for storage functions on their procurement model. 2014 IDC #252418 8

FIGURE 7 Impact of Deployment of Servers Dedicated to File/Storage on the Procurement Process by Company Size Q. How will utilization of this model (servers dedicated to file/storage services) impact your procurement process for storage capacity? Note: Small businesses have <100 employees, medium-sized businesses have 100 999 employees, and large businesses have 1,000+ employees. 2014 IDC #252418 9

FIGURE 8 Impact of Deployment of Servers Dedicated to File/Storage on the Procurement Process by Region Q. How will utilization of this model (servers dedicated to file/storage services) impact your procurement process for storage capacity? From this and the previous SUDS Survey, it's evident that Americas respondents tend to be more cautious in evaluating the magnitude of their adoption of new technologies than are respondents in APJ. American organizations, particularly those in North America, tend to have more legacy infrastructure deployments than their peers in emerging APJ countries, which account for a significant portion of survey respondents from this region. Lack of extensive reliance on legacy infrastructure allows end users in emerging APJ countries to make faster decisions when it comes to adoption of new technologies. Specific to storage within servers, APJ specifically stands out from other regions. According to IDC's Worldwide Quarterly Disk Storage Systems Tracker, internal storage (defined as storage in servers with three or more media devices [i.e., HDD and/or SSD]) in APJ accounts for more than 40% of the overall shipment of storage system terabytes, while in other regions, this ratio stays under 30%. The high ratio of internal storage terabytes in APJ is not consistent country by country within the region. China, the largest country in APJ based on total storage system vendor revenue, is the biggest outlier, with overall storage system terabyte shipments being split evenly between internal and external storage. Therefore, it's not unexpected to see more aggressive plans of survey respondents from APJ toward purchases of storage-rich servers in the future. 2014 IDC #252418 10

Likewise, the overall higher interest among APJ respondents toward purchasing servers dedicated to storage functions from ODMs is backed by regional trends: proximity and "buying local" initiatives, which is popular in some countries. One thing to notice here, especially when it comes to North America, is that the survey largely reaches respondents from general enterprises and public organizations while likely not being taken by another important group of end users hyperscale service provider datacenters. In its recent release of the taxonomy for the Storage and Server ODMs and Hyperscale Datacenters: Global Overview research (see New and Growing Channels for Storage and Server Infrastructure: The Changing Role of the ODM and Consumption by Hyperscale Datacenter Operators, IDC #252057, October 2014), IDC discusses in detail the overall role ODMs play in the hyperscale service provider datacenter market. Although hyperscale datacenters are the most significant driving force behind the proliferation of what IDC calls software-based storage (i.e., storage infrastructures based on industry-standard commodity servers), respondents to the SUDS Survey also have fairly aggressive plans on deploying servers dedicated to file/storage functions (see Figure 9). In the 12-month time frame, 62% of respondents expect that less than 50% of the overall storage capacity in the on-premises storage infrastructure will be deployed on servers dedicated to file/storage functions, while for the 24-month time frame, less than a half of respondents expect to see a similar level of servers dedicated to file/storage penetration into their organizations' on-premises storage infrastructure. At the same time, the ratio of respondents estimating that servers dedicated to file/storage will account for more than half of terabytes deployed in on-premises storage infrastructures increases from 21% for the 12-month time frame to 31% for the 24-month time frame. This is a significant end-user validation of IDC's expectations of the growth trajectory for software-based storage solutions. 2014 IDC #252418 11

FIGURE 9 Share of Servers Dedicated to File/Storage in the Overall Storage Infrastructure in the Next 12 Months and 24 Months Q. In your opinion, what part of the overall on-premise storage infrastructure (in terms of raw terabyte deployment) in your organization will be represented by servers dedicated to file/storage services in 12 months? In 24 months? n = 1,035 What drives organizations to consider deployments of servers to fulfill storage needs? Cost savings, flexibility, and scale of the IT environment are by far the top 3 drivers for respondents from various regions and company sizes (see Figure 10). Superiority of architecture was also mentioned as an equally important driver by respondents from APJ and as a next significant driver by large organizations. 2014 IDC #252418 12

FIGURE 10 Primary Drivers for Deployment of Servers Dedicated to File/Storage Services Q. What are the primary drivers for your organization to use servers dedicated to file/storage services (as opposed to using only external storage arrays)? (Select up to three primary drivers.) n = 777 Vendor Ranking In addition to the survey on important industry trends, the other part of the SUDS project is related to estimating the ranking of top suppliers of external enterprise storage systems in various data use cases. Suppliers ranked include (in alphabetical order) Dell, EMC, Hitachi, HP, IBM, NetApp, and Oracle. The rest of the suppliers are rolled up into the "other" suppliers category. The estimates are developed based on the storage system shipment data of these vendors as published in IDC's Worldwide Quarterly Disk Storage Systems Tracker. Unlike the tracker, which breaks out the storage systems market into a variety of technology- or system configuration-focused segments such as protocol, price band, or operating environment, SUDS analysis is focused on system deployments in the datacenters for particular use cases including major enterprise applications and deployments supporting IT infrastructures. 2014 IDC #252418 13

Tables 1 4 provide ranking for the top 3 suppliers for select data use cases overall and run in virtualized environments. EMC and NetApp, as market leaders in the overall external enterprise storage systems market, hold two leading positions in the majority of the use cases. Public cloud infrastructure, which includes storage infrastructure for delivering SaaS, IaaS, and PaaS as well as content offerings (services delivered by value-added content providers), is a notable exclusion. In this category, EMC and NetApp face more intense competition from HP and Dell, which have strong positions with public cloud service providers through their disk enclosure products, which IDC counts as external JBODs. TABLE 1 Top 3 External Enterprise Storage System Vendors by Select Data Use Case Based on Terabytes Shipped, 2013 Virtual Business Industry- Desktop Public Intelligence Oracle Specific Infra- Cloud Rank and Analytics Microsoft Exchange Microsoft SharePoint Applications SAP Applications Home Directory Virtual Server structure (VDI) Infrastructure 1 EMC EMC EMC EMC EMC EMC EMC EMC EMC NetApp 2 NetApp NetApp NetApp NetApp IBM NetApp NetApp NetApp NetApp Dell 3 IBM IBM Dell, IBM (tie) IBM NetApp Dell, IBM (tie) Dell IBM IBM EMC Notes: Ranking is based on IDC's estimates of external enterprise storage system capacity shipped in support of specific data use cases. Estimates are derived from the overall external storage capacity shipped by vendors in 2013 as published in IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey analysis. Public cloud infrastructure includes storage infrastructure built for delivering various services to end users including software as a service, platform as a service, and infrastructure as a service as well as for "information as a service" business or value-added content. Source: IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey, spring 2014 2014 IDC #252418 14

TABLE 2 Top 3 External Enterprise Storage System Vendors by Select Data Use Case Based on Factory Revenue, 2013 Virtual Business Industry- Desktop Public Intelligence Oracle Specific Infra- Cloud and Microsoft Microsoft Applica- Applica- Home Virtual structure Infra- Rank Analytics Exchange SharePoint tions SAP tions Directory (VDI) Server structure 1 EMC EMC EMC EMC EMC EMC EMC EMC EMC EMC, NetApp (tie) 2 NetApp NetApp NetApp IBM, NetApp (tie) IBM NetApp NetApp NetApp NetApp HP 3 IBM IBM HP, IBM Hitachi, IBM Hitachi, HP HP, IBM (tie) NetApp HP (tie) (tie) (tie) Notes: Ranking is based on IDC's estimates of external enterprise storage system factory revenue for systems shipped in support of specific data use cases. Estimates are derived from the overall factory revenue in 2013 as published in IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey analysis. Public cloud infrastructure includes storage infrastructure built for delivering various services to end users including software as a service, platform as a service, and infrastructure as a service as well as for "information as a service" business or value-added content. Source: IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey, spring 2014 2014 IDC #252418 15

TABLE 3 Top 3 External Enterprise Storage System Vendors by Select Data Use Case Run in Virtualized Environments Based on Terabytes Shipped, 2013 Virtual Business Industry- Desktop Public Intelligence Oracle Specific Infra- Cloud and Microsoft Microsoft Applica- Applicatio Home Virtual structure Infra- Rank Analytics Exchange SharePoint tions SAP ns Directory (VDI) Server structure 1 EMC EMC EMC EMC EMC EMC EMC EMC EMC HP 2 NetApp NetApp NetApp NetApp NetApp NetApp NetApp NetApp NetApp Dell 3 IBM IBM, Dell Dell, Hitachi, Hitachi, Dell Hitachi IBM IBM EMC, HP (tie) Hitachi IBM (tie) IBM (tie) (tie) (tie) Notes: Ranking is based on IDC's estimates of external enterprise storage system capacity shipped in support of specific data use cases. Estimates are derived from the overall external storage capacity shipped by vendors in 2013 as published in IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey analysis. Public cloud infrastructure includes storage infrastructure built for delivering various services to end users including software as a service, platform as a service, and infrastructure as a service as well as for "information as a service" business or value-added content. Source: IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey, spring 2014 2014 IDC #252418 16

TABLE 4 Top 3 External Enterprise Storage System Vendors by Select Data Use Case Run in Virtualized Environments Based on Factory Revenue, 2013 Virtual Business Industry- Desktop Public Intelligence Oracle Specific Infra- Cloud and Microsoft Microsoft Applica- Applica- Home Virtual structure Infra- Rank Analytics Exchange SharePoint tions SAP tions Directory (VDI) Server structure 1 EMC EMC EMC EMC EMC EMC EMC EMC EMC HP 2 NetApp NetApp NetApp NetApp IBM NetApp NetApp NetApp NetApp EMC, NetApp (tie) 3 IBM IBM Hitachi, IBM (tie) Hitachi Hitachi Dell, Hitachi, IBM (tie) Hitachi HP HP, IBM (tie) Notes: Ranking is based on IDC's estimates of external enterprise storage system factory revenue for systems shipped in support of specific data use cases. Estimates are derived from the overall factory revenue in 2013 as published in IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey analysis. Public cloud infrastructure includes storage infrastructure built for delivering various services to end users including software as a service, platform as a service, and infrastructure as a service as well as for "information as a service" business or value-added content. Source: IDC's Worldwide Quarterly Disk Storage Systems Tracker, 4Q13, and SUDS Survey, spring 2014 FUTURE OUTLOOK Storage Systems in the Next 12 Months: End-User Expectations and Purchasing Criteria Because of the SUDS Survey running two times a year, in spring and fall, we have a chance to observe how time of the year impacts end-user responses regarding plans on purchasing external storage system capacity. End users are typically more optimistic about their plans for the next 12 months at the first half of the year than toward end of the calendar year; thus responses to the spring surveys usually indicated higher-capacity purchase expectations than responses to the fall surveys. This holds true for the spring 2014 survey compared with the survey conducted in fall 2013. However, responses to the spring 2014 survey were also more optimistic than responses to the survey conducted a year ago (see Figure 11). 2014 IDC #252418 17

FIGURE 11 Plans to Deploy External Enterprise Storage Systems in the Next 12 Months by Storage Capacity and Company Size: 2013 Versus 2014 Q. How many terabytes of external storage systems is your organization planning to deploy within the next 12 months? Note: Medium-sized businesses have 100 999 employees and large businesses have 1,000+ employees. Source: IDC's SUDS Survey, spring 2013 and spring 2014 In the spring 2014 survey, a lower percentage of respondents from both categories with representative sample (medium-sized businesses and large businesses) expect to buy no external storage capacity, and the overall expectations on the amount of terabytes to be purchased in the next 12 months were also marginally higher in the spring 2014 survey. Overall, IDC data shows that growth in external storage system terabytes has slowed down significantly in the past two years. Adoption of cloud, proliferation of software-based storage, and mainstream availability of storage efficiency tools pressure end-user demands for more external storage system capacity by either helping increase its utilization or providing alternative ways to store data. Figure 12 provides breakout of respondents' storage capacity purchasing plans for external storage systems versus servers. While largely these plans remain balanced similar to current deployments of storage capacities as shown in Figure 1 20 30% of respondents expect to purchase more storage capacity for deployments within servers than with external storage systems. This is consistent with IDC's expectations that in the next five years internal storage capacity shipments will grow at faster rates than external storage system capacity. 2014 IDC #252418 18

FIGURE 12 Plans to Deploy External Storage Systems and Servers in the Next 12 Months by Storage Capacity Q. How many terabytes of external storage systems is your organization planning to deploy within the next 12 months? Q. Approximately, how many terabytes of storage will be deployed on these servers? (Servers planned to be purchased in the next 12 months.) Unlike in previous SUDS Surveys, in which we asked end users to rank a couple of dozen criteria for purchases of external storage systems, in the spring 2014 SUDS Survey, we asked respondents to pick the three most critical factors. Figure 13 summarizes factors selected by more than 20% of respondents. There are some regional and segment differences in responses on the criteria for storage system purchases. The most noticeable differences include the following: Respondents in Japan and Latin America value relationships with vendors more than capacity scalability and interoperability with existing systems. As a matter of fact, most respondents from Japan didn't consider capacity scalability as one of the top 3 factors at all. Integration with cloud storage services didn't land in the top 3 in any of the regions, but among regions, it was valued the most by respondents from APEJ more than 20% of them called it as one of the top 3 important factors as important as system functionality. System price was by far the most important criteria for small businesses. 2014 IDC #252418 19

Large businesses valued relationships with vendors slightly higher than system functionality and a close contender to the top 2 criteria capacity scalability and interoperability with existing systems. Support of multiple protocols and integrated support for multiple storage tiers were the least selected factors by respondents likely a result of the broad availability of these options on a variety of systems of different levels. FIGURE 13 Criteria for Purchasing Storage Systems Q. Please select up to three most critical factors in your decision to purchase a storage system. n = 1,035 Finally, from the perspective of systems respondents will be purchasing in the next 12 months, there was a slight drop in plans toward purchasing midrange systems and a slight increase in plans to purchase entry-level systems compared with the previous SUDS Surveys (see Figure 14). In the previous SUDS Surveys, we were also testing interest in converged and integrated systems as separate categories; in this survey, we combined them into one group of converged/integrated systems. The percentage of respondents planning to purchase converged/integrated systems (22%) was consistent with the cumulative interest shown in previous surveys for converged and integrated systems separately. 2014 IDC #252418 20

FIGURE 14 Storage System Purchase Plans by System Type in the Next 12 Months Q. What type of storage systems do you plan to purchase from storage system vendors in the next 12 months? n = 592 ESSENTIAL GUIDANCE This year, a number of IDC reports related to the storage systems market discussed how it is being reshaped by a number of emerging and not-so-emerging-anymore trends including the adoption of cloud services, flash-based systems, storage efficiency tools, and software-based solutions and, on the market players' side, the increasing role of original design manufacturers. While external storage systems in their years of existence have gained a status of a mainstream approach to fulfill the growing storage need of enterprises, a number of the listed trends, in fact, relate to alternative ways of building storage infrastructures for corporate datacenters or expanding storage assets beyond them. IDC's SUDS Survey, the results of which were discussed in this study, through its focus on end-user utilization of storage within servers, touches two of these trends directly the proliferation of software- 2014 IDC #252418 21

based storage solutions and increased role of ODMs. Analysis of the survey results coupled with other research IDC does in these areas delivers strong messages to the storage community. IDC expects that end users' interest in storage deployments based on industry-standard commodity server hardware will continue to increase fueled by the expanding availability of commercial and open source software offerings. Storage system suppliers focused on the hardware stack will risk a chance of missing the next big opportunity, isolating themselves to a niche world of segments, which will continue to demand hardware-driven storage solutions. LEARN MORE Related Research New and Growing Channels for Storage and Server Infrastructure: The Changing Role of the ODM and Consumption by Hyperscale Datacenter Operators (IDC #252057, October 2014) Worldwide File- and Object-Based Storage 2014 2018 Forecast (IDC #251626, October 2014) Worldwide Storage in Big Data 2014 2018 Forecast (IDC #250232, August 2014) Storage User Demand Study, 2013 Fall Edition: Rising Adoption of Flash Storage (IDC #250106, August 2014) IDC's Worldwide Software-Defined Storage Taxonomy, 2014 (IDC #247700, July 2014) Worldwide and U.S. Enterprise Storage Systems 2014 2018 Forecast: Alignment with the 3rd Platform Is the Next Must-Have (IDC #248554, May 2014) Structured Versus Unstructured Data: The Balance of Power Continues to Shift (IDC #247106, March 2014) IDC Worldwide Storage Predictions 2014: Storage Disruption Flash, Cloud, and Software- Based Storage (IDC #WC20140109, January 2014) Appendix Figures 15 17 provide details into the survey respondent demographics. 2014 IDC #252418 22

FIGURE 15 Respondents by Region FIGURE 16 Respondents by Company Size 2014 IDC #252418 23

FIGURE 17 Respondents by External Storage Systems Capacity Deployed Verticals Table 5 shows key subindustries included in the primary vertical markets. 2014 IDC #252418 24

TABLE 5 Vertical Industry Categorization Vertical Finance Communications and media Construction Consumer and recreational services Discrete manufacturing Government Healthcare providers Insurance Private education Process manufacturing Professional services Public education Resources Retail Securities and investment services Transportation and transportation services Service providers/ telecommunications/cable Utilities Wholesale Subindustry Banking, insurance, financial services, credit institutions Publishing, broadcasting, telecommunications Heavy construction and special trade contractors Services focused primarily on the consumer such as hotels, entertainment services, and social services Automotive, apparel, furniture, equipment/machinery, publishing, electronics, leather Local, state, federal Hospitals, outpatient services, physician office, medical testing Healthcare insurance payers, life insurance, property and causality, brokers, and other insurance Private elementary and secondary education, private colleges and universities, other private organizations providing educational services Food, paper, petroleum/chemicals/pharmaceutical, stone/clay/glass, primary metals Business, legal, engineering, management, IT, real estate, or Internet-related services Educational services and library/archives Fuel extraction, agriculture, mining, and other extractive industries Eating and drinking establishments The variety of institutions that facilitate and execute capital transfers Trucking and warehousing, rail, water, and other support activities such as air control and towing Cable, satellite, and telecommunications service providers Sanitary services Import and export business Source: IDC, 2014 2014 IDC #252418 25

Data Use Cases Table 6 outlines the data use cases covered by SUDS and groups them into three categories: major application support, IT infrastructure support, and other. TABLE 6 SUDS Data Use Cases by Group Data Use Case Group Data Use Case Major enterprise application support MS Exchange MS SharePoint Oracle applications SAP Storage dedicated to business intelligence/business analytics Industry-specific application (e.g., PACS, CAD/CAM, GIS) IT infrastructure support Home directory Virtual desktop infrastructure (VDI) Virtual server Public cloud infrastructure* Other Other * Public cloud infrastructure includes storage infrastructure built for delivering various services to end users including software as a service, platform as a service, and infrastructure as a service as well as for "information as a service" business or value-added content. Source: IDC, 2014 Synopsis This IDC study provides an analysis of IDC's recent survey of 1,000+ end users around the world completed as part of the biannual Storage User Demand Study. The survey focuses on one of these trends utilization of servers for storage-related functions and the ways this deployment model changes the system procurement process. The enterprise storage systems industry is being disrupted in a number of ways, which include demand for new types of storage architectures, services, and even system suppliers. "SUDS Survey respondents uniformly stated that they will be increasing utilization of servers dedicated to file and storage services in their overall storage infrastructures," says Natalya Yezhkova, research director, Storage Systems. "This intent will also have ramifications on what and how they buy and deploy systems in the future. Storage systems suppliers should stay alert of these developments as adjustments of strategies and course of product development could be crucial to remain relevant in coming years." 2014 IDC #252418 26

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