Enterprise Storage Systems Market Share

Worldwide Enterprise External OEM Storage Systems Market Spending Expected to Cool Down in 2023 and Grow 3.4% over a 5-year period, According to IDC

In the second quarter of 2023 the external enterprise storage systems (ESS) market was expectedly weak with vendor revenue (including traditional sales and sales of storage hardware for as a service consumption) declining 4.7% year-over-year. IDC expects that this is the first quarter in the wave of market weaknesses, which is driven by the overall market slowdown, the aftermath of strong wave of spending in 2022, and redirection of spending / efforts on catching up the AI/GenAI movement.

In 2022. The external ESS market experienced higher than usual growth, which, besides regular drivers, was fueled by economy-centric factors such as increasing prices and interest rates and the looming risk of recession, as well as extra shipments of back-ordered systems. Now, the industry is moving in the period of “hard compares”, when in the absence of the new equally strong short-term factors, the regular demand for storage systems results in disadvantageous comparisons with an abnormally strong performance in previous periods.

An interesting nuance to this development, however, is that it coincides with high interest to exploring, introducing, and integrating more AI-centric workloads, which, while can be strategic in nature, haven’t yet become mission-critical for day-to-day operations. At the same time, AI is one of the workloads which is both performance- and data-intensive. With the current hype around AI, we expect some boost in demand for server and storage products, which will keep the infrastructure markets in a relatively good shape compared to some other IT segments. However, for storage systems the booming impact from AI, and especially, Generative AI (GenAI) is delayed as the compute element of the AI infrastructure is a priority.

While inflation is impacting the majority if not all regional markets, growing energy prices hit some regions more, especially, those regions that are closer to the conflict between Russia and Ukraine. Europe overall is in a leading position on developing and adopting green energy at a high scale and these developments created an additional push for higher demand for more energy efficient and sustainable systems, which is also expected to be a longer-term trend across all regions. Another consideration related to this trend is tied to tightening energy supply to support growth of datacenter footprint and performance-hungry (and hence, energy-consuming) emerging workloads, such as AI/ML.

While projections of the worldwide GDP growth slightly improved for 2023 and 2024, the reevaluation of regional GDPs varied with some regions seeing downgrade or no change in expectations. Even with upgrades, GDP growth across major regions, US, Western Europe, and Japan is expected to stay in low single digits, while in China it slows down to mid single-digit.

These market dynamics will impact the enterprise storage systems market performance in 2023 and beyond.

Data table for "Worldwide ESS External OEM Market Forecast 2022 - 2027 Value (US$M)" chart

Year	External OEM Value	External OEM Market Annual Growth %
2022	$34,124	8.2%
2023	$33,843	-0.8%
2024	$35,696	5.5%
2025	$37,496	5.0%
2026	$39,186	4.5%
2027	$40,301	2.8%