Why 2016 Redefined the Storage Industry: Key Trends, Deals, and Emerging Players

10. Storage Market Stagnation?

2016 may have marked the beginning of a long‑term decline in the storage market as data increasingly migrated from proprietary devices to cloud, software‑defined, and server‑based products.

IDC reported that global enterprise storage system revenue was essentially flat at $8.8 billion in Q2 2016 versus Q2 2015, and fell 3.2 % to $8.8 billion in Q3, while flash storage and hyperscale data‑center segments continued to grow.

9. Flash Storage Gains Momentum

Despite contraction in other segments, 2016 was a breakthrough year for flash storage. IDC estimated Q3 2016 all‑flash market revenue at $1.1 billion, a 61 % year‑over‑year increase, and hybrid flash arrays generated $2.1 billion, representing 24.1 % of the overall storage market.

Traditional vendors such as Dell EMC, NetApp, HPE and IBM occupied four of the top‑five revenue positions, leaving only Pure Storage among the leaders.

8. Software‑Defined Storage Matures

VMware released VSAN 6.2, addressing previous limitations and signaling the maturity of software‑defined storage.

Other major players—including IBM, HPE, Dell EMC, and niche firms like Ceph, Nexenta, DataCore, SwiftStack and Pivot3—enhanced their offerings to move customers away from dedicated storage appliances toward more powerful server‑based solutions.

7. Hyper‑Convergence Takes Off

Hyper‑converged infrastructure (HCI) combined compute, storage, networking and virtualization under unified management, gaining broad attention in 2016, especially after Nutanix’s highly anticipated IPO.

Gartner projected HCI revenue to exceed $2 billion in 2016, a 79 % increase over 2015.

VMware launched the VxRail software stack for integrated HCI appliances, and Cisco quietly introduced HyperFlex.

Notable acquisitions included Nutanix buying PernixData, Pivot3 acquiring NexGen Storage, and Gridstore acquiring DCHQ to transform hyperscale infrastructure into services.

6. Continued Vendor Acquisitions

At least 30 storage vendors disappeared in 2016 through acquisitions, underscoring the industry’s rapid consolidation.

NetApp acquired SolidFire for its cloud‑scale all‑flash technology.

Western Digital bought SanDisk to expand its all‑flash capabilities.

eFolder purchased Replibit to provide MSP data‑protection software.

Cavium acquired legacy storage‑interface maker QLogic.

StorageCraft bought Gillware’s data‑analysis expertise.

Dell’s $60 billion acquisition of EMC made Dell the world’s largest storage vendor.

5. Start‑ups Emerging from Stealth Mode

Numerous storage startups stepped into the spotlight, including:

Cloudistics (hyper‑converged infrastructure)

Symbolic IO (high‑density server‑based storage)

DriveScale (scale‑out infrastructure merging compute and storage)

E8 Storage (software‑defined NVMe solutions)

Diamanti (network‑and‑storage appliances for Linux containers)

Datos IO (scale‑out data‑protection software)

Daera (software turning servers into cloud‑storage platforms)

Simply (high‑performance RAID/Thunderbolt devices for media professionals)

Igneous Systems (on‑premises storage managed by Igneous behind firewalls)

Kaleao (scalable ARM‑based storage solutions)

4. Venture Capital Still Loves Storage

Many startups secured significant funding in 2016, for example:

$70 M – Zerto (virtualized data‑center and cloud DR software)

$61 M – Rubrik (converged data‑management platform)

$55 M – Pivot3 (hyper‑converged infrastructure)

$55 M – Datrium (converged storage for private cloud)

$51 M – Druma (cloud data protection and discovery)

$41 M – Cloudian (hybrid‑cloud object storage)

$40 M – Datera (software turning servers into cloud‑storage platforms)

$35 M – Elastifile (software‑defined all‑flash storage)

$32.5 M – Qumulo (scale‑out NAS)

$25 M – CTERA (secure data sync and sharing)

$15 M – DriveScale (scale‑out compute and storage)

$15 M – Cloudistics (hyper‑converged infrastructure)

$13 M – CloudEndure (real‑time migration and DR)

$12.5 M – Diamanti (network‑and‑storage appliances for containers)

$12 M – E8 Storage (software‑defined NVMe solutions)

3. Lenovo’s Serious Push into Data‑Center Infrastructure

After acquiring IBM’s x86 server business in early 2014, Lenovo has been building its own storage portfolio through partnerships, including a solution that combines Lenovo servers with Nimble all‑flash and hybrid arrays, as well as hyper‑converged products based on Nutanix, Pivot3 and SimpliVity.

2. NetApp’s Resurgence

Once poised to overtake EMC, NetApp experienced years of decline before rebounding after Dell’s acquisition of EMC made it the largest independent storage vendor and the second‑largest flash vendor.

In the fiscal Q2 2017 earnings release, NetApp showed flat revenue but began to grow, with its all‑flash business outperforming market averages and a strategic shift toward high‑margin, cloud‑friendly products such as Data Ontap.

1. Dell Becomes the Undisputed Storage King

In September 2016 Dell completed its $60 billion acquisition of EMC, becoming the world’s largest data‑storage company.

Beyond storage, the deal positioned Dell as the largest data‑center infrastructure provider, the second‑largest server vendor, a virtualization leader through VMware, and a player in networking and PC markets.