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Why Is Flash Storage Growth Important for NetApp?

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Jun. 2 2016, Updated 3:06 p.m. ET

Flash plays key role in customers’ IT transformation

Storage company NetApp (NTAP) has stated that flash plays a key role in customers’ IT transformations. Companies look to gain advantages from greater speed and value from key business applications. Flash is thus becoming the de facto technology for primary workloads. Customers are looking to realize performance and economic benefits by replacing hard disk installations with flash.

In the company’s latest earnings call, NetApp CEO, George Kurian, stated, “We won a multimillion-dollar deal over emerging all-flash competitors with a U.S.-based customer in the transportation industry, with all-flash FAS and EF for its production database, VDI and disaster recovery environments. They chose NetApp due to the reliability and rich feature set of our product portfolio.”

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The year of consolidation for flash storage business

According to the research firm IDC, only Hewlett Packard Enterprise (HPE) experienced revenue growth in 2015 because the all-flash market has continued to become more competitive. All the large suppliers including EMC (EMC), HPE, NetApp, IBM (IBM), and Dell started 2016 with existing platforms. These platforms underwent upgrades on the basis of capacity, performance, and features.

Once dominated by storage startups, flash technology has grabbed the attention of traditional enterprise storage vendors like EMC, NetApp, IBM, and Cisco Systems (CSCO). But the all-flash market is consolidated with the top six players accounting for over 80% of total revenue.

According to a report from IDC and as shown in the above chart, NetApp and SolidFire account for 9% and 7.2%, respectively, of the all-flash array market. So NetApp’s acquisition of SolidFire should help to increase its share significantly. IDC stated that the all-flash storage market is expected to grow at a CAGR (compounded annual growth rate) of 58.5% in 2016.

IBM accounts for 3.2% of the Technology Select Sector SPDR (XLK).

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