EMC (
EMC
), the global leader in the external disk storage market,
unveiled a range of lower priced data storage products in January
with the aim of expanding its offerings to a cloud platform which
happens to be the fastest growing segment for data storage
industry. This new development will help EMC to better serve
small-to-medium sized clients and compete against NetApp (
NTAP
) in the cloud computing space. NetApp (
NTAP
) mainly competes with IBM (
IBM
), HP (
HPQ
) and Dell (
DELL
) in the external disk storage systems market.
With increased competition, we see downside to our
$63.09 Trefis price estimate for NetApp's stock
if EMC manages to take market share from NetApp in the
small-to-medium storage market.
EMC Targets Small and Medium Businesses
EMC's new unified storage line, called VNX, is expected to be
the cheapest in its class and will allow EMC to make inroads into
the small and medium enterprise (SME) market. The new unified
storage also combines EMC's Clarion and Celerra offerings into
a single system for file, block and object data allowing users to
manage data from a single device, reducing hardware requirements
and simplifying data management.
Recently EMC also acquired Isilon Systems, a small storage maker
with a cheaper and more flexible approach to network-attached
storage to extend its cloud offering. Isilon's technology allows
companies to quickly build large clusters of storage devices on
inexpensive commodity hardware making EMC's offering more
competitive to NetApp's.
Potential Downside to NetApp
Over the years, NetApp's strength in desktop virtualization and
its unified storage strategy under a single OS has helped the
company boost its external hardware market share. The firm controls
nearly 25% of the small-to-medium storage market and has been the
dominant player in the cloud storage offerings and lower priced
data storage products competing with firms like IBM and HP that
also compete in this market.
With EMC pushing into the SME market aggressively, NetApp may
witness flat or even a decline in market share depending on the
growth of this market and competition. We currently forecast
NetApp's share in total storage market will increase from just over
11% in 2010 to around 13% in the coming years. However if
competition from EMC and others results in stable market share,
this would imply about 12% downside to our
price estimate for NetApp's stock
.
You can drag the trend line above to see the impact of
various storage hardware market share scenarios on NetApp's
stock.
See our
complete analysis of NetApp's stock
.