- "The outlook for storage spending continues to look mediocre as users pause and consider their alternatives. Although there still may be a storage upgrade cycle coming, we don't see it in our recent survey work," writes UBS, explaining why it's downgrading NetApp (NTAP -3%) to Neutral. EMC (EMC -1.3%) investors also aren't crazy about the commentary.
- A recent Barclays CIO survey also indicated storage spend remains soft, albeit while painting a brighter picture for broader IT spending. IDC estimates external disk storage sales grew 2.4% Y/Y in Q4 after falling 5.6% in Q3, with EMC grabbing share from IBM and NetApp's share roughly holding steady.
- UBS is also worried about intensifying competition from storage startups and cloud infrastructure providers. Smaller vendors offering all-flash or hybrid flash/hard drive solutions - examples include newly-public Nimble Storage and private Tintri and Nutanix - have seen rapid growth. NetApp is hoping to counter them with its upcoming FlashRay systems.
- Cloud infrastructure giant Amazon Web Services has been growing rapidly as well, and rivals such as Microsoft and Google are doing their utmost to play catch-up. Amazon, Microsoft, and Google all recently announced huge price cuts for their cloud storage offerings.
- Amazon and Google's platforms run on white-label hardware, and Microsoft is reportedly thinking of going down the same path.