REGIONAL

The Middle East and African (MEA) enterprise storage sector has grown immensely in the past decade, driven by the rapid development of regional economies and the sheer volume of data being generated by private and public sector organisations.

While overall investment in data storage solutions now accounts for a significant amount of enterprise information technology (IT) spend, a recent study conducted by the US’ IDC concluded that there remained a major shortfall between the volume of data being generated annually and the amount of available storage.

Globally, the company estimates this shortfall to be in the vicinity of 35 per cent of total data. By 2014, IDC expects this figure to be about 60 per cent.

The MEA region is at the forefront of this trend, given the comparative lack of physical storage infrastructure and economic growth projections for the coming decade.

Innovative technologies for small businesses

While the 2008-09 global recession significantly dented mid-term forecast growth, 2011 has seen a significant recovery in market sentiment, driven by demand for innovative and cost-effective storage solutions and new developments in the areas of network attached storage (Nas) and virtualisation.

MEA data storage market share
EMC 35
HP 20
IBM 17
NetApp 10
Dell 6
Hitachi 4
Oracle 3
Other 3
Huawei-Symantec 1
Fujitsu 1
Source: IDC
MEA=Middle East and Africa. Source: IDC

The industry’s major vendors have reacted accordingly to this trend, developing new technologies designed specifically for small-to-medium enterprises (SMEs). They are also working to consolidate their share of the high-end storage market, which has traditionally accounted for the bulk of sales in this sector.

The enterprise data storage sector has traditionally been dominated by three US-based suppliers: EMC, HP and IBM, which together account for more than two-thirds of total market share in the MEA region. Not surprisingly, the MEA market closely mirrors global trends, with EMC, HP and IBM accounting for the top three positions in terms of overall sales revenue worldwide.

Year-on-year overall market growth (%)
First quarter, 2011 Second quarter, 2011
16.9 21.4
Source: IDC

EMC has moved to consolidate its market leading position by aggressively pursuing new opportunities in emerging data storage categories, including Nas. The firm’s share of the Nas market was 31.9 per cent in the second quarter of 2011, according to IDC. Its closest competitor was UK rival NetApp, which accounted for 15 per cent of the market.

EMC, HP and IBM maintain a significant presence in the MEA region. All three companies operate regional headquarters in Dubai, while EMC also has offices in key markets, including Saudi Arabia, Qatar, Bahrain, Nigeria, Egypt and Jordan.

EMC’s focus on developing storage arrays and related infrastructure solutions for key MEA industry sectors, including banking, energy and communications, has provided it with a significant regional foothold and an important differentiator from its core rivals, whose presence is spread across multiple IT sectors.

Total regional storage capacity (PB)
First quarter, 2011 Second quarter, 2011
163.1 petabytes  177 petabytes 
PB=Petabytes (a petabyte is equal to 1,000 terabytes). Source: IDC

EMC has delivered several high-profile storage infrastructure projects to enterprise customers in the MEA region over the past 12 months. Among these was a six-month, three-phase server virtualisation project for Commercial Bank of Qatar (CBQ), which included the development of a private cloud-based storage system for the financial organisation.

It was also responsible for delivering a consolidation and virtualisation solution to the Bahrain Central Informatics Organisation (Bahrain CIO), with a view to developing a cloud-based storage system for the governmental organisation in the long term.

Multipurpose IT solutions

HP’s and IBM’s presence in the data storage market is tied to a broader strategy aimed at delivering multipurpose IT solutions, namely server plus storage arrays, to large-scale regional enterprises.

For example, HP recently supplied a broad-scale hardware solution to Saudi Arabia’s Al-Majdouie Group, consisting of servers, storage, back-up systems and other services, along with providing support for critical applications, such as Oracle Enterprise Resource Planning.

Revenues ($m)
First quarter, 2011 Second quarter, 2011
366.8 406.3
Source: IDC

In the past, EMC’s strategy has been to deliver storage arrays designed to operate in conjunction with third-party devices, including servers. However, a proposed move by the firm to develop technology that would allow clients to run applications directly on the storage array, eliminating the need for an independent server array and creating a cost-effective virtual server, would prove appealing to budget-conscious enterprises operating in the MEA region. It would also further weaken the monopolistic stranglehold enjoyed by the likes of HP and IBM on the broader enterprise IT market.

Increasing investments in data storage

According to figures supplied to MEED, 2011 has been proving a busy year for the MEA data storage sector, with year-on-year market growth topping 21.4 per cent in the second quarter. Revenues reached $406.3m, with investments in high-end storage solutions doubling year-on-year.

Regional storage capacity year-on-year growth (percentage)
First quarter, 2011 Second quarter, 2011
50 75
Source: IDC

Demand for these premium technologies is being driven largely by the development of new telecommunications and banking projects in markets, such as Saudi Arabia and South Africa.

After the relatively lean period following the global economic crisis, large enterprises are investing again in storage consolidation technologies. While these companies remain the primary commercial target for vendors, there is also an increasing trend towards developing solutions for SMEs, particularly products that incorporate back-up and cloud storage capabilities.

The development of Nas technologies and increasingly sophisticated virtualisation solutions is shaping enterprise IT expenditure in the MEA region.

According to IDC figures, the Nas market grew 155.8 per cent in the second quarter of 2011, with fibre-channel technologies dominating sales, accounting for a 63.8 per cent market share.

Strong growth was recorded in both the low- and high-end Nas sectors, with sales of equipment priced below $25,000 and above $250,000 respectively accounting for the bulk of revenues. Revenues in the high-end sector rose 87 per cent year-on-year, accounting for 26.9 per cent of total sales.

The fact that both extremes of the market performed well illustrates the growing importance of the SME sector to data storage vendors and their increasing focus on cost-effective, flexible and innovative solutions.

The development of cloud-based storage solutions is also set to have a major impact on the storage sector, particularly in relation to SMEs.

Recent research published by the US’ Deloitte predicts the cloud computing industry will enjoy a compound annual growth rate of 24 per cent up to 2013.

Cloud computing

However, developing custom-designed private cloud-based storage networks remains a costly proposition and doubts remain over the suitability of public clouds for anything other than short-term data storage. While some pioneering enterprises, such as CBQ and Bahrain CIO, are leading the market by implementing private cloud-based storage infrastructure, the vast majority of MEA enterprises still prefer to host and archive sensitive data in-house.

The growing importance of small-to-medium firms is reshaping the storage sector in both commercial and technological terms

The MEA data storage market has mostly been defined by demand for high-end solutions that are required for major infrastructure and private enterprise projects, but the growing importance of SMEs is slowly reshaping the sector in both technological and commercial terms.

Given the rebound in economic sentiment, ongoing infrastructure development and recorded sales across the MEA region in 2011, it is likely that growth in enterprise data storage shipments will continue its upward trajectory through 2012, driven by increased demand for Nas and storage virtualisation solutions.

Network storage technologies in focus

Network attached storage (Nas) devices provide a stable platform for sharing data across multiple computers on a network. A Nas device typically features several hard drives arranged in a redundant array of independent disks. It often features a stripped-down operating system, which can be configured via a network-based browser. One of the most important benefits of Nas is that it removes the responsibility for file sharing from the main network server, creating greater network efficiencies in the process.

Storage virtualisation usually adds an additional link between servers and storage systems, controlling data flow and locating it when required. This enables network administrators to control multiple networked storage devices as one resource. This in turn improves efficiencies across the entire network.

The flood of technologies and applications in both domains is indicative of their impact on the data storage sector.