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Archana venkatraman IDC

Archana Venkatraman
Senior Research Analyst, European Storage Research

Read full bio  @ArchanaTweets

IDC Carla Arend

Carla Arend
Program Director, European Software

Read full bio  @carla_arend

As another year comes to an end, we look back at 2016 for highlights that shaped the European storage industry.

GDPR countdown has begun: One of the biggest highlights of 2016 is the formal adoption of the General Data Protection Regulation (GDPR) on 27 April 2016. The two-year transition period has begun for enterprises and technology providers to work together and get ready for compliance when GDPR comes into effect from 25 May 2018.

GDPR unifies data protection legislation across all EU countries. Its scope is global and applies to any organization in the world dealing with EU citizens’ personal data. The penalties for non-compliance are substantial, making data protection a boardroom issues.

IDC predicts that GDPR will create a $3.5 billion market opportunity for storage and security vendors. GDPR-related storage software alone will grow from $258 million in 2016 to $1.7 billion in 2019.

IDC, especially the European storage and security teams, is ramping up our research and consulting initiatives around GDPR. We have a lot of exciting GDPR research coming up in 2017 — in terms of market sizing, end-user survey data and thought leadership to help technology providers and businesses plan out their GDPR strategies! We’d love to hear your GDPR strategies and/or your questions for us around it!

Brexit: U.K.’s decision to leave the EU is creating a significant level of uncertainty across the globe. Based on previous high-profile and often large-impact events, we see a tendency execute only extremely necessary IT investment until there is more geo-political clarity.

The storage market will shrink in the short to medium term — as planned datacenter modernization s and new datacenter buildouts in the U.K. could be postponed or delayed. Large multinational organizations will reconsider U.K. as the best location for long-term datacenter investment. Besides, the devaluation of GBP drives storage manufacturers to adjust (increase) their pricing making it difficult for U.K. businesses to acquire technologies at desired budgets.

IDC believes Brexit will help organizations bring clarity into their public/private cloud strategies.

End-user adoption trends: Data volume and variety continued to bring storage challenges to enterprises in 2016, prompting more European organizations to test and evaluate newer storage technologies. This appetite to shift away from traditional storage, coupled with the need for cost-effective storage solutions and digital transformation ambition shaped vendor and buyer strategies around storage this year. We saw a rising interest for modern storage technologies – all flash datacenters, software-defined infrastructure, hyperconverged infrastructure, object storage, programmable infrastructures.

More innovation in flash arrays: In 2016, all-flash arrays (AFAs) segment continued its strong momentum in Europe. By Q3 2016, flash storage accounted for more than 68% of spend in EMEA. Flash vendors, both pure-play startups and incumbents, continued innovating on flash storage to bring the cost down, add more data services and make storage VM-aware. Enterprises and service providers started truly relying on flash to run multiple workloads in 2016.

Dwindling high-end storage arrays market share: The traditional HDD (hard disk array) segment continued to fall YoY forcing all storage vendors to accelerate innovation.

Growing interest in software-defined storage: Led by open source storage software and SDS startups, software-defined storage adoption has increased across enterprises of all size and verticals making it the fastest growing storage software segment in EMEA.

Era of commoditization: the growing interest in software-defined solutions accelerated the transition from hardware to software differentiation in the form of software-defined infrastructure (SDI).

Industry consolidation/split

Dell-EMC merger complete: In September 2016, Dell Technologies completed the acquisition of EMC, the largest provider of external storage and a key player in the cloud and datacenter software space, for $67 billion. It has created a $74 billion worth vendor with a technology portfolio spanning from hybrid cloud, software-defined datacenter, and converged infrastructure through to analytics, platform as a service, mobility, and cybersecurity. According to us, Dell Technologies held 30% of European enterprise storage systems market in Q3 2016 making it a market leader with a wide majority.

HPE: 2016 was a landmark year for Hewlett Packard Enterprise as it rationalized its enterprise technology portfolio following the highly publicized split from HP Inc. in 2016, HP announced the “spin merge” of its services group to Computer Sciences Corporation (CSC) and “spin merge” of its noncore software assets to Micro Focus. Both transactions are expected to close in FY17 for the company. HPE also announced that SUSE has signed a definitive agreement to acquire HPE’s OpenStack infrastructure-as-a-service (IaaS) and Cloud Foundry platform-as-a-service (PaaS) assets.

We also saw NetApp complete SolidFire acquisition and Veritas split from Symantec and both introduced consolidated business strategies and storage solutions. Meanwhile Nimble Storage entered the all-flash market.

What to look out for in 2017 and beyond

As digital transformation becomes enterprise-wide, organizations will find change taking place from the storage infrastructure and network layers all the way to the developer environments. 2017 will push more enterprises to deepen focus on business-centric SLAs, open APIs, compliance, microservices architecture, DevOps, and application development. This in turn, for storage watchers means:

  • Further hardware commoditization and increased SDI
  • GDPR-related storage spend
  • Maturity in open source technologies
  • Hybrid architectures
  • Storage spending beyond 3rd Platform – IoT related storage spend
  • Data management and automation becomes even more critical
  • High-availability and low latency becomes the new normal

What you can expect from us in 2017?

Deeper focus on:

  • Hot storage technologies – Flash, hyperconverged, object storage, software-defined
  • Digital transformation/Innovation Accelerators (IoT, Cognitive, AR etc.) and how they are shaping datacenter infrastructure
  • Open source infrastructure (including containers, automation tools, OpenStack, CloudFoundry, Hadoop)
  • Data management/information governance/data protection
  • GDPR and storage/ other regulatory compliance and storage infrastructure
  • European End-Users’ needs and challenges
  • Hybrid architectures
  • Cool and innovative vendors and technologies

And of course, watch out for our 2017 exhaustive datacenter end-user survey and results series.

2016 was another momentous year shaping the future of storage! 2017 will be another exciting chapter. We look forward to hearing about your vision for 2017 and beyond.

See you in the New Year! Happy Holidays All!

For more information on this topic, please contact the IDC European Storage Research Team: Archana Venkatraman & Carla Arend