) market share in storage software is back on track after falling
for the past few years. Competition is stiff among the top five
software storage vendors, namely EMC, Symantec (
), IBM (
), NetApp (
) and Hitachi. Although EMC still leads the market with close to
25% share, players like NetApp and Hitachi are soon catching up
with stronger revenue growth than EMC's.
While we estimate EMC's storage software share will rise to 28%
by the end of our forecast period, Trefis members predict the share
will cross 30% implying some modest upside to our EMC stock price
We currently have a
Trefis price estimate of $35.11 for EMC's stock
, about 30% above the current market price of $26.20.
EMC Gaining Share in Hardware Market
Both hardware as well as software have done well in 2010 in the
overall storage market. EMC has maintained its leadership in
storage software, its share increasing by almost 2 percentage
points from 2009 to 2010. A major factor responsible for this
increase is EMC's equally brilliant performance in the storage
hardware market, which influences the sales of software products.
The acquisition of Data Domain in 2009 is also showing positive
results for the firm.
Hardware sales influence the sales of software products since
they are bundled by storage vendors. EMC's storage hardware market
share increased from 22% in 2009 to 25% in 2010, boosting sales of
its software products as well. We believe that EMC's increasing
hardware sales, boosted by new products launches, will continue to
drive software sales in the coming years. EMC recently launched a
new unified storage line, VNX, which is expected to be the cheapest
in its class.
The new product allows users to manage data from a single
device, reducing hardware requirements and simplifying data
management. EMC is expected to make inroads into the small and
medium enterprise (SME) market through VNX, competing with NetApp
in cloud computing space. (see
EMC's New VNX Storage Line a Threat to NetApp
EMC Maintains Leadership, But Competition is Stiff
EMC is benefiting greatly from the recovery in the software
storage market. According to IDC, the overall storage software
sales rose 10.3% to $12.7 billion for full year 2010, a sharp
contrast of a 3.2% decline witnessed in 2009. The market research
firm attributed new product innovations and desire to address
inefficiencies related to storing, protecting, and managing
corporate data as partial factors for the sustained recovery.
While EMC maintains its #1 position in the storage software and
hardware market, it's getting tough competition from players like
Hitachi and NetApp. While EMC saw 18% revenue growth (year on year)
in Q4 2010 for storage software, Hitachi saw 47% growth during the
same period. In the total disk storage systems market while EMC's
2010 revenues grew 32.5% (year on year), NetApp's revenues grew
near 50%. EMC also shares its No. 1 position in total disk storage
systems market with HP for full year 2010, according to IDC.
complete analysis for EMC's stock is here