History (1994): IDC Outlook on IBM/PCM Mainframe DASD Market by David Vellante

According to David Vellante, SVP at IDC, IBM/PCM mainframe DASD by David Vellante, the WW value of the IBM/PCM mainframe DASD subsystem business declined 1.5% to roughly $5 billion in 1993 vs. previous expectations for a 5% decline.

The market was hurt by nearly 30% price/GB declines; however, it was buoyed by an exception ally strong showing from EMC and solid performances from Hitachi Data Systems and Comparex.

Better-than-expected performance came from IBM in USA, and Amdahl also contributed to slow the decline in this business.

Although gigabyte shipment growth appears solid, continued price declines and sluggish demand overseas is expected to put downward pressure on revenues.

The biggest story of 1993 was EMC’s explosive growth. The company increased its share of industry gigabytes shipped from 5% in 1992 to nearly 15% in 1993, primarily at the expense of IBM. HDS, Comparex, and Amdahl managed to basically maintain share. Other suppliers, namely Memorex/Telex (which exited the business in 1993), Olivetti, and StorageTek remained non factors.

While the mainframe DASD business has declined significantly since the strong showing in calendar year 1990, opportunities remain for those companies able to keep costs down and/or gain share.

EMC has been the most obvious success story, and its entrance has changed the competitive shape of the business. IBM is expected to respond this year with an aggressive product set.

Competition is bound to escalate, and margin pressures will increase as significant price declines are the one certainty in this business.

Observers should pay close attention as the business takes form in 1994.

The following factors warrant this attention:

• IBM’s February/March announcement on EMC and other PCMs could suppress PCM momentum if IBM’s performance claims are met. Additionally, acceptance of RAID 5-protected DASD will determine exposure levels of suppliers lacking this capability. – Mainframe DASD pricing continues at a significant premium relative to microprocessor-based systems. Downsized system trends will continue to put pressure on mainframe DASD prices, and declines (on a per gigabyte basis) in excess of 30% are not out of the question.
• Economic trends remain a key factor in mainframe DASD demand. The U.S. economy will continue to improve and will outpace growth in Europe and Japan. European economies will remain sluggish overall although mixed, with the UK and Scandinavian countries potentially performing above expectations.
• IDC currently assumes that industry-standard 5.25-inch and 3.5-inch Winchesters will successfully withstand the rigors of the mainframe environment.
• The acceptance of ‘fat’ products (high-capacity, lower price/GB subsystems) from PCMs will be a key trend in 1994.L ow prices tor these products will attract incremental business; however, we believe the increment will be modest (less than 20% of overall gigabytes shipped) and steal some share from conventional devices.

Products from HDS (6.5-inch 3390-9 compatible) and EMC (using 5.25-inch 9GB drives) will bear watching.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 76, published on May 1994.

Note: Vellante is since 10 years co-founder, CEO, entrepreneur, writer, co-host of theCUBE, analyst, based in Marlborough, MA.