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.
Slow Growth for Traditional Storage Leaders
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.
Growth for Cloud Services…BOOM!
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.
IaaS Market Share
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.
Estimated $800M-$1.2B Storage-as-a-Service Revenue in Q2 18
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.
Q2 18 STaaS Rankings
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.
AWS #3 Enterprise Storage Vendor in 2017
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.
AWS Can Sustain Their Growth Rate. Here’s Why.
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.
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.
AWS #1 Enterprise Storage Vendor in 2020
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.
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.