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Data storage sector faces a challenging start to 2017

We are heading for challenging times in the data storage sector, says Nick Powling, General Manager, Components at Hammer, the award-winning value-add distributor with 25 years’ experience in data storage, servers and end-to-end IT solutions.

There appears to be something of a dichotomy in the SSD market at the moment. On the one hand, a shortage of NAND flash - a key component - is leading to a shortage in the supply of SSDs. On the other, the all-flash array market, according to IDC, is growing fast, breaking the $1bn revenue mark in Q3, 2016.

So what’s going on?

This time last year (early 2016), prices of SSDs were falling and capacities were increasing. This dream combination made SSDs a viable alternative to HDDs for large scale enterprise storage. Times are changing. Sure, the higher capacity is still available but that shortage in the supply of NAND memory, coupled with a rise in demand from a variety of sources (smartphone as well as SSD vendors), is starting to push prices of SSDs up.

The supply issue is due to manufacturers switching from producing 2D to 3D NAND with a corresponding short-term drop in manufacturing capacity while the factory refits take place. Trendfocus says the NAND shortage will “continue through most of 2017. From a pricing perspective, this means continued higher prices for SSDs in the market.”

Yet IDC is reporting that in EMEA, all-flash arrays are grabbing market share from traditional hard disks. Flash has become "the de facto standard,” said Alexander Wallner, NetApp’s EMEA general manager. “There is almost no system we are selling right now which is not all flash or at least hybrid,” he said, cited by CRN. That last comment is certainly true based on Hammer’s experience. Most solutions shipped from Hammer are now hybrid.

This apparent anomaly must be due, in part, to problems in the HDD sector. Although HDDs unexpectedly had the biggest quarter-over-quarter recovery in seven years, according to Trendfocus, the HDD industry is also now beginning to exhibit the early signs of "tightened" supply, which means there could be shortages and higher prices in that segment as well.

That’s down to HDD vendors reducing their manufacturing capacity and distribution hubs as part of a cost-cutting programme. While this will enable them to keep investing the money they save into R&D for the next generation of products, it has resulted in longer delivery times and reduced flexibility for last-minute ordering.

At Hammer, we see challenges in both the HDDs and SSD markets continuing throughout the first half of 2017 in terms of supply. We will have to wait and see what impact there is on pricing but cannot stress enough to our customers that the earlier they can give us insight into their HDD and SSD requirements, the better the chance we have of getting the necessary stock for them.

Hammer is the leading distributor for both Enterprise HDDs and SSDs. As market dynamics change with regards to product transitions, pricing and most importantly availability we will continue to work with our partners to identify the best solutions to help meet their needs.

Source: Hammer
Published Date: 24/01/2017

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