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The Week In Storage: Bezos Buzzes Past $100 Billion, Nutanix Flashes $100 Million Grin

By - Source: Toms IT Pro
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The week in storage began with Dell's announcement that it is reselling EMC and VCE's hyperconverged offerings as well as updating its line of Nutanix-powered XC Series servers. The move paves the way for an expanded partnership between Dell and EMC as the second largest merger in tech history plods along to its October completion.

Marvell announced the abrupt departure of its co-founding CEO and President as the first signs of an accounting scandal began to surface. The husband and wife duo fled to their cushy positions on the Board, which is a nice compromise.

X-IO Technologies is no stranger to flash-based storage solutions, and its ISE and iglu Blaze products are very successful. However, X-IO has its eye on the future and is breaking the mold with its new Axellio prototype. Axellio rolled 72 dual-port NVMe SSDs, GPU support and a scale-out architecture into one spicy storage burrito that debuts in Q3.

Bezos's Amazon Buzzes Past $100 Billion

If you listen closely, you can hear Jeff Bezos's iconic laugh rolling through the hills of Seattle as his company surpassed $100 billion in sales last year. The Amazon frontman wrote a thoughtful Form 8-K ode to his adoring shareholders that revealed Amazon's sales crossed into the 12-figure range, and the Amazon Web Services (AWS) subsidiary will surpass $10 billion in sales this year.

AWS is largely credited, and rightly so, as being the pioneer and driving force behind mass cloud adoption. AWS dwarfed all of its competitors in 2015 with a 37 percent share of the $23 billion cloud market (according to the Synergy Research Group). Microsoft is the nearest competitor with 9 percent share, but Amazon's 63 percent year-over-year growth rate indicates that the rest of the field will continue to lag behind for the foreseeable future.

The cloud itself grew at 52 percent last year, and if the mass exodus to the cloud is any indication, the growth rate will only continue to accelerate. A recent Spiceworks survey revealed that 93 percent of responding organizations are currently using at least one cloud service and that 30 percent plan to have more than half of their services in the cloud within the next two to three years.

Bezos also took the time (while he was not meting out lashings to his underlings) to address Amazon's corporate culture. An August article in the New York Times reported that Amazon fosters a punishing and hostile environment that features, among other fun things, 80-hour workweeks. Amazon remained silent on the article until now, and though Bezos did not address it directly, he attempted to explain the Amazon torture culture and proclaimed that the company is a great place to fail (literally)--all while he raised his glass to the next $100 billion. 

Nutanix Amends IPO Filing

Nutanix announced its pending $200 million IPO in late December 2015 but delayed its plans due to market conditions. It is worth noting that there has not been a single IPO this year, so Nutanix is not the only company seeking shelter from the hostile market conditions.

Nutanix apparently still intends to embark upon its IPO journey, and to that effect, it filed an amendment to its Form S-1 registration. The amendment reveals that Nutanix's quarterly revenue increased to $102 million in 1Q2016, which is a healthy increase over the $88 million in 4Q2015. The increased revenue falls in line with the trajectory of the exploding hyperscale market, but the company's losses continue to mount. Nutanix lost $71.8 million last quarter, which brings its accumulated losses to $345.2 million.

Nutanix continues to expand its customer base, which grew from 1,168 to 2,638. The expansion of its customer base is becoming important as Dell announced it is reselling a broad portfolio of EMC and VCE hyperconverged offerings that dwarf its own Nutanix-powered XC Series lineup.

Dell continues to offer the Nutanix products, but frankly, the writing is on the wall. Nutanix's amendment to its S-1 filing indicates it may be the first company to make the IPO leap this year, and it will likely be soon.

This Week's Storage Factoid

Another week, another grim storage report. Trendfocus outlined the increasingly terrible state of the HDD market in its Preliminary CQ1 2016 Quarterly Update.

The total number of HDDs shipped fell 13 percent quarter-over-quarter (Q/Q) and 20 percent year-over-year (YoY). Desktop (3.5") HDDs declined from 38 million to 36 million Q/Q, with a drop in external storage devices shouldering some of the blame. The declining external market makes sense to some extent. Many users are shuffling backup data off to the cloud in lieu of employing external backup options.

The 2.5" mobile HDD segment is cratering; it experienced a stunning 30 percent Q/Q loss (20 percent YoY). Enterprise nearline HDDs actually experienced slight growth to 16.5 million for CQ1, which is encouraging, but the continued density increases are actually fueling a slower growth rate in terms of the number of units sold. 

It is clear the HDD vendors are losing, but it's hard to declare that the SSD vendors are the winners. SanDisk is being sold, Toshiba is restructuring, Micron posted its first loss in 12 quarters, and Samsung's financial reporting is nebulous at best. However, it is clear that there is not a whole lot of winning in the SSD segment currently.

The declining desktop market is hurting both sides; HDD vendors cannot move units and SSD vendors have far too many units on the market, thus depressing the Average Selling Price (ASP). An unhealthy ASP murders profits in an industry that already has razor thin profit margins, and pouring more 3D NAND on the already-doused fire might make the situation worse.

Paul Alcorn is a Contributing Editor for Tom's IT Pro, covering Storage. Follow him on Twitter and Google+.

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