The Data Storage Market: What Does It Mean for EMC and Its Peers?

Data storage solutions expected to reach $41.3 billion by 2018

Research company Frost & Sullivan expects the number of connected devices to reach 26 billion by 2020. The Asia-Pacific region is projected to be among the fastest-growing markets in the enterprise data storage space. Enterprises in this region are concentrating on offering affordable cloud computing storage.

Frost & Sullivan expects that the enterprise data storage market will expand at a CAGR (compound annual growth rate) of 3.2%, from $36.4 billion in 2014 to $41.3 billion in 2018.

The Data Storage Market: What Does It Mean for EMC and Its Peers?

“Storage devices such as hard disks and flash storage have either performance issues or inadequate capacity,” said Frost & Sullivan digital transformation industry analyst Sandeep Bazaz. “As both these storage systems have already established their footprint in the market, enterprises need to embrace hybrid models that offer them the performance of flash storage and the capacity of hard disks.”

VMware backs out of Virtustream joint venture in 4Q15

In May 2015, EMC (EMC) announced its $1.2 billion acquisition of Virtustream, a company that operates its own data centers offering cloud services to customers. According to the joint venture plan between VMware (VMW) and EMC in October 2015, VMware and Virtustream intend to combine their cloud services.

In December 2015, VMware stated that it would not proceed with the joint venture, but it did not explain why. The company stated that it would continue to operate its cloud services independently.

Gartner named Virtustream a niche player in its 2015 Cloud IaaS Magic Quadrant. Amazon Web Services (AMZN) and Microsoft (MSFT) continue to be leaders in the cloud IaaS space. With Virtustream in its portfolio, EMC could position itself as a strong player in the expanding public cloud infrastructure market. Microsoft constitutes 10% of the Technology Select Sector SPDR ETF (XLK).