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AWS #3 Storage Vendor in 2017 | #1 in 2020

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This IT Brand Pulse industry brief uses crowd-sourced data about storage and cloud revenues to estimate the size and ranking of the AWS storage business. The bottom line is AWS is the #3 ranked storage vendor in 2017 and will be #1 in 2020.

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AWS #3 Storage Vendor in 2017 | #1 in 2020

  1. 1. AWS #3 StorageVendor in 2017 | #1 in 2020 Industry Brief
  2. 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. 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). As you can see, revenue for the traditional storage leaders is not growing while the ODMs are growing rapidly-- mostly because they're supplying storage systems to the hyperscale cloud STaaS suppliers. Top 5VendorGroups,WorldwideTotal Enterprise Storage Systems Market, 4Q2017 (US$ millions) Company 4Q17 Revenue 4Q17 Market Share 4Q16 Revenue 4Q16 Market Share 4Q17/4Q16 Growth T1 - HPE/ H3C $2,565.3 18.9% $2,492.3 20.9% 2.9% T1 - Dell Inc. $2,434.7 18.0% $2,749.0 23.1% -11.4% T3 - IBM $744.6 5.5% $685.6 5.8% 8.6% T3 - NetApp $735.3 5.4% $642.0 5.4% 14.5% T5 - Huawei $517.7 3.8% $401.8 3.4% 28.9% T5 - Hitachi $453.1 3.3% $462.8 3.9% -2.1% ODM Direct $2,764.3 20.4% $2,058.9 17.3% 34.3% Others $3,341.2 24.6% $2,429.7 20.4% 37.5% AllVendors $13,556.1 100.0% $11,922.2 100.0% 13.7%
  4. 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 (Billions of U.S. Dollars) 2016 2017 2018 2019 2020 Cloud Advertising 90.3 104.5 118.5 133.6 151.1 Cloud Application Services (SaaS) 48.2 58.6 71.2 84.8 99.7 Cloud Business Process Services (BPaaS) 39.6 42.2 45.8 49.5 53.6 Cloud System Infrastructure Services (IaaS) 25.4 34.7 45.8 58.4 72.4 Cloud Application Infrastructure Services (PaaS) 9.0 11.4 14.2 17.3 20.8 Cloud Management and Security Services 7.1 8.7 10.3 12.0 13.9 Total Market 219.6 260.2 305.8 355.6 411.4
  5. 5. 23% 18% 16% 14% 13% 11% 6% 0% 5% 10% 15% 20% 25% IaaS PaaS SaaS Mgt & Security Total Market Advertising BPaaS Compound Annual Growth Rate by Cloud Service Category, 2016-202o Source:Gartner Public Cloud Services Revenue Forecast,October 2017
  6. 6. In August of 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. 51% 13% 5% 3% 2% 25% 0% 10% 20% 30% 40% 50% 60% Amazon Microsoft Alibaba Google IBM Others MarketShare
  7. 7. IT Brand Pulse estimates that AWS storage revenue is between 15 and 20% of overall revenue. Below 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 for Q2 2018 and our estimates, AWS storage revenue was between $900 million and $1.2 billion in Q2.That is an annual storage run-rate of $3.6 to $4.8 billion.
  8. 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 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 STaaS @15% $158 $151 $175 $213 $235 $274 $313 $361 $385 $430 $485 $530 $549 $615 $688 $767 $816 $917 STaaS @20% $210 $201 $234 $284 $313 $365 $417 $481 $513 $573 $646 $707 $732 $820 $917 $1,023 $1,088 $1,222 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Millions
  9. 9. $1,222 $319 $110 $79 $45 $599 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Amazon Microsoft Alibaba Google IBM Others MarketShare Source: Gartner, Worldwide IaaS Public Cloud Services Market Share, and IT Brand Pulse Combine the Gartner market share estimates for overall IaaS and our estimate that up to 20% of the overall revenue comes from storage, and you get the following chart showing STaaS revenue and rankings for Q2 18.
  10. 10. Put the annual storage run-rate of $3.6 to $4.8 billion into the IDC storage rankings we looked at earlier and "Voila!" you see that AWS is today a solid #3 in enterprise storage revenue.The gaudy AWS growth rate stands out and provides a strong hint that we should not expect AWS to stay at #3 for long.
  11. 11. Top 5 Vendor Groups, Worldwide Total Enterprise Storage Systems Market, 4Q2017 (US$ millions) Company 4Q17 Revenue 4Q17 Market Share 4Q16 Revenue 4Q16 Market Share 4Q17/4Q16 Growth T1 - HPE/New H3C $2,565.30 17.36% $2,492.30 19.56% 2.90% T1 - Dell Inc. $2,434.70 16.47% $2,749.00 21.57% -11.40% 3 AWS @ 20% of Rev $1,222 8.27% $820 6.44% 49.00% T4 – IBM $744.60 5.04% $685.60 5.38% 8.60% T4 – NetApp $735.30 4.98% $642.00 5.04% 14.50% T6 – Huawei $517.70 3.50% $401.80 3.15% 28.90% T6 - Hitachi $453.10 3.07% $462.80 3.63% -2.10% ODM Direct $2,764.30 18.71% $2,058.90 16.16% 34.30% Others $3,341.20 22.61% $2,429.70 19.07% 37.50% AllVendors $14,778.20 100.00% $12,742.10 100.00% 15.90% Source: IDCWorldwideQuarterly Enterprise Storage SystemsTracker, March 1, 2018 and IT Brand Pulse
  12. 12. 69% 43% 43% 47% 49% 81% 78% 69% 64% 58% 55% 47% 43% 42% 42% 44% 48% 49% 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 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 an upswing in their growth rate 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. 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. 14. Q4 2017 YoY Q4 2018 YoY Q4 2019 YoY Q4 2020 HPE $2,565 2.90% $2,640 2.90% $2,716 2.90% $2,795 Dell EMC $2,435 -11.40% $2,157 0% $2,157 0% $2,157 AWS $1,222 48.00% $1,809 48.00% $2,677 48.00% $3,962 AWS $1,222 48.00% $1,809 40.00% $2,533 40.00% $3,546 AWS $1,222 48.00% $1,809 30.00% $2,378 30.00% $3,091 Trajectory with DifferentYear overYear Growth Rates In the model below, we estimated that the growth rate for HPE storage would be the same as Q4 2017, Dell EMC would see zero growth, and AWS would enjoy from 30% to 48% annual growth. Even if AWS growth decelerates to 30% per year, the company will emerge as the #1 enterprise storage vendor in 2020. It is more likely that AWS will race past the pack in 2020 while sustaining well over 40% growth and driving over $15 billion in annual storage revenue.
  15. 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

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