Little known unbranded manufacturers are making inroads into the storage market as the cloud commoditises the industry storage, according to a new report by market researcher IDC. Meanwhile, the market for traditional external storage systems is shrinking, it warns.

The data centres of big cloud companies like Google and Facebook are much more likely to buy from smaller, lesser known storage vendors now, as they are no longer compelled to commit themselves to specialised storage platforms, said IDC in its latest Enterprise Storage report.

Revenue for original design manufacturers (ODMs) that sell directly to hyperscale data-center operators grew 25.8 per cent in the second quarter of 2015, in a period when overall industry revenue rose just 2.1 per cent. However, data centre purchases accounted for US$1 billion in the second quarter, while the overall industry revenue is still larger, for now, at $8.8 billion. However, the growth trends indicate that a shift in buying power will take place, according to IDC analyst Eric Sheppard. Increasingly, the platform of choice for storage is a standard x86 server dedicated to storing data, said Sheppard.

ODMs such as Quanta Computer and Wistron are becoming increasingly influential, said Sheppard. Like many low-profile vendors, based in Taiwan, they are providing hardware to be sold under the badges of better known brand names, as sales of server-based storage rose 10 per cent in the second quarter to reach $2.1 billion.

Traditional external systems like SANs (storage area networks) are still the bulk of the enterprise storage business, which was worth $5.7 billion in revenue for the quarter. But sales in this segment are declining, down 3.9 per cent in that period.

With the cloud transferring the burden of processing to data centres, the biggest purchasers of storage are now Internet giants and cloud service providers. Typically their hyper-scale data centres are software controlled and no longer need the more expensive proprietary systems that individual companies were persuaded to buy, according to the report. Generic, unbranded hardware is sufficient, provided that it is software defined, the report said.

“The software, not the hardware, defines the storage architecture,” said Sheppard. The cloud has made it possible to define the management of storage in more detail, so that the resources can be matched more evenly to each virtual machine. This has cut the long term operating costs. These changes will intensify in the next five years, the analyst predicted.

EMC remained the biggest vendor by revenue with just over 19 per cent of the market, followed by Hewlett-Packard with just over 16 per cent.