Enterprise Storage Systems Market Share

Updated: 29 June 2022

Worldwide Enterprise External OEM Storage Systems Market Spending is Expected to have a CAGR of 4.4% During the Next Five Years, According to IDC

In the first quarter of 2022, the external ESS market grew 2% y/y, however, regional performance was uneven. Supply chain disruptions, invasion of Ukraine by Russia, and inflation were and continue to be the major inhibitors to the market growth. The first quarter highlighted what the market can expect through the year: strong demand driven by the need for storage to support digital transformation initiatives, enhance analytics, increase employee productivity, and improve customer experience, on one hand, and tight supply and increasing system prices on the other.

The supply chain is expected to remain tight for several quarters and a recovery is expected in late 2022/early 2023, which meanwhile will lead to increasing backlogs. The pent-up demand will be an additional driver for the market growth in 2022 and 2023.

While most regions continue recovering from the COVID-19 pandemic easing the restrictions and opening borders, the impact of the pandemic isn’t over yet as some countries (most notably, China) continue exposing occasional lockdowns. These lockdowns in regions with heavy concentration of manufacturing facilities and transportation hubs add to delayed recovery of the supply chain.

The war between Russia and Ukraine continues impact the market in both direct and indirect ways. In the most direct way, system sales in Russia and Ukraine plunged in Q1 2022 and will continue declining driving the decline in the overall Central and Eastern European region. Indirectly, the war added to already growing energy prices and transportation costs, which have a rippling impact on the IT industry.

Russia and Ukraine are major suppliers of neon gas and palladium, both used in the semiconductor manufacturing process. In the short-term (3-6 months), accumulated inventories should satisfy demand for raw materials resulting in minimal if any disruptions to component manufacturing. Mid-term (9-24 months) will be critically impacted by ability of alternative suppliers to increase or initiate production of raw materials in other regions. Ramping up of the production and supply chain adjustment could take time resulting in possible component shortage toward end of 2022 and the beginning of 2023. Long-term, we expect full adjustment of the supply chain to source raw materials from outside of Russia and, possibly, Ukraine.

Overall, the storage systems market is more resilient to the negative forces than some other IT segments due to continuous business digitization which relies on data. Moreover, some of the developments enable more infrastructure spending in some workloads including security and data protection.

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