Data Center Hardware and Software

Part
01
of two
Part
01

Vendors/Manufacturers

Primary vendors IBM, NetApp, and Western Digital all have different strategies in marketing to customers. It was found that IBM focuses on using experts to pitch their technology, NetApp focuses on using case studies, and Western Digital focuses on using white papers and reports. An overview of their marketing strategy is detailed below.

IBM

  • For all of their lines of businesses, including their enterprise solutions segment, IBM uses a combination of psychographic, geographic, and demographic segmentation variables. They do selective targeting to make a particular product and service available to their clients according to their requirements.
  • Their website has a MediaCenter that has videos that show off their products, including the FlashSystem Flashcore. They have most of the same videos and more on their YouTube channel called IBM Storage.
  • IBM does a bulk of their advertisements through digital advertising, and they also post regularly on their Facebook and Twitter pages. Each social media page is used to show informative content about the data center world, and how their products can help make it better.
  • They have videos that feature computer generated graphics of their hardware, with moving text and shiny backgrounds. However, their YouTube channel prominently features experts from IBM that talk about their products and how it can help make a data center better. Some of these experts are high-ranking, which is seen in the video by IBM Fellow and CTO of FlashSystem Andy Walls.
  • Even in their broader Data Center Services webpage, they put a lot of emphasis on experts. This can be seen on their social media posts too, as their most recent social media post is about their CMO Eric Herzog talking at a recent conference put on by Cisco. Using experts to talk about the use of their products in a non-salesman-like way makes it seem like their products are the products that other professionals should be using, rather than just a product that they could use.
  • In terms of offers, IBM doesn't usually market their products as a single solution, but they market solutions that are often integrated, offering multiple products in various areas to solve a variety of problems.
  • On their website, IBM often uses the terms "transformation" and "future". Apart from these terms, they also push a message with the use of their experts in their many videos on YouTube and social media that their products are the products that everyone should use.
  • Their strategy is more product-focused than brand-focused, as their aim is to market their product to fit the client's needs. But with their digital ads, they place the IBM logo very prominently and use ambiguous marketing language, such as can be seen with their Hybrid Data Management ads.

NETAPP

  • NetApp's marketing strategy is focused on promoting a number of its key products such as their all-flash storage business. They are focusing on marketing these products because they now make up 76% of their net product revenue.
  • NetApp markets through blog posts on their website, through digital ads, through YouTube videos, and through other social media channels such as Facebook. The messaging on all these channels are similar in showing how other companies use their products, and how their hardware and other products are aligned with the cloud.
  • One of their digital marketing strategies is to use examples of important companies that are using their products. Some of these companies include Boerse Stuttgart, WuXi NextCODE, and Dreamworks Animation. This same strategy can be seen on their social media pages, where they mention companies like Ducati using their technology to solve problems related to data storage and processing.
  • Hardware is a very important facet of their business, but they focus a lot on their cloud business, which can be seen in the way they mention cloud more than other technologies. When they do mention non-cloud services, they mention their next-gen tech such as their all-flash storage systems. They also link to reports done by third parties like Gartner that mention their products which gives some added validation to their products.
  • In terms of offers, NetApp usually pushes the 'hybrid cloud' and 'futuristic' narratives and tie their products to an established cloud service. An example of this can be seen on their homepage, where they promote their services within Microsoft Azure. Under their Products and Solutions, they place their cloud, hybrid cloud, and flash storage offerings at the top, and the rest of their hardware and services follow afterward.
  • NetApp is a data center vendor company, but many businesses are now moving away from having their own data centers and moving to the cloud. This is why in all aspects of their business NetApp is leaning towards messaging that features the cloud and marketing their products to say that they are being used in the world's biggest cloud services.
  • NetApp is also selling its hardware products as something that is futuristic as the cloud, such as their flash storage systems that replace disk storage systems. It is also why they mention 'multi-cloud' a lot.
  • Over ten years ago, NetApp had a problem with declining sales along with people not knowing the brand like they knew their major competitors IBM, Dell EMC, and HP. To combat this, they went on a brand awareness campaign with a new logo and tagline. Recently, with a growing brand awareness and a growing annual revenue of close to $6 billion, NetApp decided to rewrite their brand strategy again to spur even more growth.
  • CMO Jean English stepped into the role in 2016 and began to rewrite the brand narrative, focusing on making the company as more than a technology hardware provider, which aligns with the CEO's own vision for the company. This brand-focused strategy can be seen in their digital ads, where they feature the logo very heavily and put content that tells the story of a feature or a company that used their product, without naming the product itself. The ads also feature large call-to-action words such as 'Find Out More' on a clickable button.

WESTERN DIGITAL

  • For a long time, Western Digital was widely known in the domestic and small-scale data storage space, but after acquiring SanDisk, they entered the data center business which now accounts for 30% of all their sales. Their Data Center Systems portfolio includes the growing-in-popularity line of all-flash storage, their Ultrastar line, as well as their IntelliFlash series and their ActiveScale series. They market these products on their website by making one cohesive experience where corporate messaging could tie in with the purchase of their products.
  • Western Digital markets its products through two main YouTube channels associated with their enterprise solutions: Western Digital Corporation and Data Center Systems by Western Digital. They also have social media pages such as their Facebook page and Linkedin page.
  • On social media, Western Digital constantly reviews the needs and views of their most active customers on social media and on communities like Reddit. Western Digital also has an internal channel called the Reseller Council, where they hear from their partners on their products, marketing campaigns, and other ideas.
  • Their marketing team is in charge of hearing customers out, and they contact customers directly to let them know that they care and are listening. Their customers may believe them, as Western Digital's engagement on surveys can be as high as 80%.
  • Western Digital's digital advertising is somewhat similar to NetApp's, where they have ads showing factual statements by third-parties like Gartner, with a link to the report or white paper. They have many ads mentioning NVMe, which seems to be related to their IntelliFlash line of flash arrays which use NVMe technology. They have ads for each product-line that they offer, and there is always a 'Learn More' action button associated with them, which is different from the consumer-oriented ads which usually have 'Click here' or 'Buy Now'.
  • In terms of offers, Western Digital has marketing language on their website, their ads, and in their social media posts, that they offer their products alone instead of in bundles with other products of their own or by other vendors.
  • Western Digital seems to put a lot of emphasis on research and development. Their ads and content show how their products can drive discovery and the development of new products. For instance, the very top of their homepage tells a story of how their products were used to visualize a black hole. Then below that, they show different types of products that they sell for the data center, such as their storage systems, data center drives, and platforms. The messaging is similar in their digital ads, where they are geared towards learning and research.
  • Their advertising is more product-focused. They will almost always use the names of technologies such as IntelliFlash in their digital ads, social media posts, and videos. Each social media post usually links to a longer article or video that explains the technology or product in greater detail. They will also occasionally mention a testimonial in their social media posts, such as is seen in the featured quote by the CTO of Sony Pictures Studios on their IntelliFlash product and how it helped his company make uncompressed 4K videos.

RESEARCH STRATEGY

In finding 3 primary vendors, we first looked at what a primary vendor is. It was discovered that a primary vendor is one that is usually the one that would appear on bills and merchandise reports on a multi-vendor item. We determined that this meant that primary vendors would usually make and sell their own products and product bundles directly to the customer. We also had to make sure that they did this for medium and large businesses, so we sought businesses that sell data center products to the enterprise, which is a term that can describe businesses of any size, but is usually meant to describe medium and large businesses. A list was found of top enterprise data storage vendors, and we confirmed this list could be used because it had a list of data center vendors with Dell, HP, and Lenovo. We then went ahead and looked for other US companies that fit the bill. We used IBM and NetApp as they are deemed direct competitors to Dell, HP, and Lenovo in this space, and we also used Western Digital because it "produces data center storage systems like Ultrastar for the data center." After this, we sought articles, case studies, and papers that described each company's strategy as it related to their data center products. In the case of IBM and Western Digital which had other businesses apart from their data center business, we used papers and articles that described their overall marketing strategy and used examples and information from their data center marketing to bolster what we found. Social media channels, their websites, and media channels were scrutinized for themes to properly analyze what their strategy for their data center products is. For each company, we give a short overview of their strategy and detail their tactics, offers, main messages, and whether their marketing is product-focused or brand-focused.
Part
02
of two
Part
02

Data Center Industry Insights

Insights surrounding the requested details within the global data center hardware and software industry center on (a) the projected growth of the colocation and managed hosting market, (b) the customers' growing adoption of colocation, (c) the concerns of data center managers relating to design, hardware installation and configuration, operation, and hardware upgrade and retrofit, (d) the innovations in infrastructure including underwater data centers, data center infrastructure management software, and liquid cooling, and (e) Asia Pacific's differences from the United States and Europe. Businesses appear to be moving out of the data center business to focus on their core competencies.

GROWTH OF COLOCATION

  • Reducing capital investment by renting space instead of building a private data center appears to be on an upward trend considering that the global data center colocation and managed hosting market is expected to grow from US$43.69 billion in 2017 to US$189.43 billion by 2026 at a CAGR of 17.7%. The increasing adoption of cloud-based storage systems is the primary driver of growth in the market.
  • The global data center colocation market alone is projected to grow from US$31 billion in 2017 to US$105 billion by 2026 at a CAGR of approximately 14.2%. These figures indicate that colocation holds the lion's share of the global colocation and managed hosting market.
  • Colocation is the practice where a business houses its own servers and other hardware in a third-party data center, while managed hosting is the practice where a business rents/leases servers owned by a third party. Either way, the business reduces its data center capital investment.
  • Amid "the rise of the service provider and the decline of the enterprise data center," sale-leaseback transactions are gaining traction. An enterprise engaging in a sale-leaseback transaction sells its data center to a third party (e.g., a colocation service provider) and leases back a portion of the space to house its facilities (e.g., servers).

CUSTOMERS' PERCEPTION OF COLOCATION

  • Available statistics suggest that colocation is well-received by customers. Uptime Institute's recent survey of 867 data center operators worldwide revealed that of data center operators anticipating edge computing capabilities, 26% plan to utilize a combination of colocation data centers and their own private data centers, 14% plan to outsource to public cloud service providers, and 11% plan to utilize mostly colocation data centers.
  • Vertiv's recent poll also revealed that of 226 enterprise data center managers in the United States, 50% use colocation, 15% plan to use colocation in the following 12 months, and 57% expect their use of colocation to increase in the following 2 years. Of enterprise data center managers at businesses generating less than US$1 billion in revenue, 31% use colocation, 28% use own data center, 22% use cloud services, and 19% use managed hosting. Of enterprise data center managers at businesses generating over US$1 billion in revenue, on the other hand, 35% use colocation, 35% use own data center, 19% use cloud services, and 11% use managed hosting.
  • Based on Vertiv's poll, the top reasons for using colocation or planning to use colocation were better future scalability (34%), network or edge connectivity (22%), insufficient staff (13%), insufficient data center budget (13%), quicker time to market (12%), new capabilities as a result of mergers or acquisitions (12%), new business lines (11%), latency or location (10%), support for burst capacity (9%), and support for high-performance computing (8%).
  • Seventy-two percent of Vertiv's respondents indicate their expectations regarding their use of colocation were met. Compared to larger companies, smaller companies were more satisfied with their use of colocation. The use colocation is not without challenges, however; it is constrained by problems relating to cost, security, and internal staffing.
  • On the subject of colocation and cloud, distinguished Gartner analyst David Cappuccio says enterprises "want to be out of the data center business" because the data center business is not their core competency.
  • Steve Madden, a senior director of marketing at Equinix, also says "infrastructure is not dead, but there's less and less reason to have a corporate data center."

FOCUS OF DATA CENTER MANAGERS

  • The top concerns of data center managers suggest that their focus is on data center design, hardware installation and configuration, data center operation, and hardware upgrade and retrofit.
  • When it comes to design, they are focused on facilitating data center automation, maintaining the correct temperature, and ensuring that the data center can accommodate varying hardware and software requirements.
  • When it comes to hardware installation and configuration and operation, they are focused on provisioning hardware, improving interoperability across hardware and software, and maintaining security.
  • When it comes to hardware upgrade and retrofit, they are focused on minimizing work disruption and identifying available power capacity.
  • On the subject of data center infrastructure management (DCIM) solutions or software, almost 40% of data center managers across the United States and the United Kingdom appear to be most excited about the prospect of them freeing up their time for other tasks or activities.

DATA CENTER INFRASTRUCTURE INNOVATIONS

  • Examples of innovations in modern data center infrastructure include Microsoft's underwater data centers and the dome-based data center at the Oregon Health & Science University campus. These were cited as data center design innovations at the Data Center Executive Roundtable in which Jack Pouchet of Vertiv, Erich Sanchack of Digital Realty, and Samir Shah of BaseLayer participated.
  • Though considered by some as risky and impractical, the underwater data centers are widely regarded as a brilliant and bold move on the part of Microsoft.
  • Sanchack of Digital Realty notes that they draw attention to one of the biggest challenges the data center industry faces — "how to cool increasingly dense racks." He adds that Digital Realty projects that water-cooled systems will replace air-cooled systems over time and that using reclaimed water will be more sustainable in the long run.
  • Shah of BaseLayer views the underwater data centers as a brilliant idea, as they not only leverage deep-water cooling but also address the challenge of finding space near end-users. According to Shah, almost 50% of the population is located within 125 miles of lakes, seas, and oceans. The underwater data centers addresses issues related to cooling, latency, space, and sustainability.
  • Jack Pouchet cites the dome-based data center at the Oregon Health & Science University as another example of design innovation. According to Pouchet, the data center leverages the laws of thermodynamics to optimize airflow management.
  • Pouchet also ponders the possibility of underground data centers where the entire container is buried and there is only an access shaft for information technology or facilities staff.
  • Different kinds of renewable energy sources are also now being used to support higher density levels. AFCOM's global survey of data center professionals revealed that the following renewable energy sources are already being used or will be used in the following 1-3 years: solar (83%), hydro (63%), wind (63%), and geothermal (48%).
  • The use of data center infrastructure management (DCIM) software, which offers accurate data on resource use, data center assets, and operational status, has now become mainstream as well.
  • Liquid cooling, one of the innovations noted by Sanchack, is gaining traction as higher-density workloads emerge in light of artificial intelligence.

REGIONAL DIFFERENCES

  • Global surveys of data center professionals, such as those published by Uptime Institute and AFCOM, do not indicate any regional differences.
  • An article published by Data Center Dynamic, however, states that the Asia Pacific region differs from the United States and Europe in the following aspects: size of gateways, fragmentation, strength of manufacturing sector, and population. These differences could either hinder or promote the growth of the data center market in the region.
  • Each region has gateway cities where data centers serve nearby territories. Asia Pacific's gateway cities (e.g., Singapore, Hong Kong, Tokyo, and Sydney), however, are smaller than their counterparts in the United States and Europe.
  • Data center markets in the United States and Europe are homogeneous, but those in Asia Pacific are fragmented with laws and regulations that vary across countries.
  • Compared to the United States and Europe, the Asia Pacific has a relatively stronger manufacturing sector, which, in light of the impending shift to Industry 4.0, is likely to drive demand for edge computing services.
  • The Asia Pacific also accounts for 60% of the world's population. As there is a trend towards personalization, the huge population may play to the region's advantage.
  • North America and Europe leads the global data center colocation market, but Asia Pacific is expected to grow fast.
  • The Nordic region is a prime spot for data centers as it has a cool climate and a stable geography. In the region, earthquakes are uncommon and renewable energy sources abound.
Sources
Sources

From Part 01