In recent months, AI conferences of all sizes have been held with great enthusiasm across various regions. In addition to the heavily discussed topics of large models and computing power, an interesting phenomenon is that storage manufacturers have also been particularly active. Huawei just recently launched a new AI storage and all-flash storage at the Full Connection Conference, and shortly after, Sugon Storage proposed to "create an advanced storage power center" at the 2024 Data Storage and Computing Ecology Conference...

This year, with the dual support of the AI large model landing trend and the construction of intelligent computing centers, what new changes and progress have occurred in the storage market, which has existed for decades?

Recently, through the Chinese government procurement network platform, the frontline of digital intelligence has incompletely sorted out the domestic storage project bidding situation in the first eight months of 2024, from which some characteristics of the storage market have been observed. To obtain complete information on 375 storage projects (some with contact information), please leave a message in the background.

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01 More than 375 projects, with operators contributing the largest single

Unlike the large model and intelligent computing center projects that have only recently exploded in the past two years, the procurement of storage is a large base and relatively mature market. Just on the Chinese government website we focused on, the procurement side mainly comes from the government and public services such as science, education, culture, and health. There are at least 375 related bidding information in eight months, widely distributed in cities across the country.

In addition, there are hundreds of projects on other publicly available statistical channels, mainly involving finance, manufacturing, energy, operators, transportation, etc. In the future, we will conduct special statistics for these industries.

Looking at the main procurement targets, these projects are not always separate purchases of storage devices, but also include supporting purchases of switches, networks, servers, etc., as well as related projects such as storage expansion and maintenance.

In terms of the bidding amount, except for the large-scale centralized procurement projects of operators, the amount of most projects is generally not large, ranging from hundreds of thousands to millions of yuan.

Among the more than 375 projects incompletely counted by the frontline of digital intelligence, only 11 projects have a bidding amount of more than ten million yuan, and the top three projects are all operator bidding projects.

China Telecom and China Mobile have carried out large-scale storage procurement this year. For example, the "China Telecom Guangdong Branch 2023 Edge Cloud Distributed Storage Framework Procurement" jointly won by Huawei and Qun Ding Technology is worth about 100 million yuan.The largest project in terms of bid-winning amount in the first eight months of 2024 was the distributed storage centralized procurement project tendered by China Mobile, with a total value exceeding 200 million yuan; among them, Package 1 (Distributed File Storage - High Performance Standard Configuration) was won by Huawei and ZTE; Package 2 (Distributed Block Storage - Performance Type Standard Configuration) was won by ZTE, Sugon, and Huawei.

Industry observation shows that although the mobile headquarters carries out large-scale centralized procurement of distributed storage products every year, compared with last year, both the procurement quantity and budget have increased this year.

In addition to operators, industries such as hospitals, government, culture, and education have also seen projects with a value of more than ten million yuan, mainly purchasing high-end storage equipment, or synchronized procurement with servers, switches, etc. For example, in the PACS computing storage procurement project of West China Hospital of Sichuan University, the price of a single all-flash storage and object storage reached more than 2 million yuan and more than 1 million yuan, respectively.

02 In government affairs and public utilities, medical procurement accounts for more than 40%

According to incomplete statistics from the China Government Procurement Network, in government and public utilities, medical, government, and education are the industries with the most orders, contributing more than 40%, more than 30%, and more than 10% of the project quantity, respectively.

Especially in the medical field, 135 hospitals of various sizes from all over the country have completed more than 160 storage-related project bids together, many of which are storage expansion projects for HIS, PACS, etc. "The demand for medical cloud is continuously driving the industry's procurement of storage," a senior industry insider told the front line of numbers and wisdom, currently, the policy-driven nature of medical cloud investment is more obvious, in addition to large tertiary hospitals, a large number of small and medium-sized medical institutions are also accelerating the upload of medical data.

It is also worth mentioning that in the hospital's storage procurement, more hyper-converged storage system projects are emerging.

In the past, the medical industry had to buy cloud and storage from two major basic suppliers, and required the medical users' own maintenance personnel to coordinate the platform docking and debugging. The hyper-converged system has virtualization capabilities, which can better achieve "out-of-the-box use" compared to the previous method of purchasing virtualization platforms/software and hardware devices separately. For some users, hyper-convergence can allow users to quickly obtain computing power, storage power, and cloud platform management capabilities at the same time, so it is favored in the medical cloud and other industry cloud fields.

Since the projects collected on the China Government Procurement Network are mainly projects of public institutions such as government, science, education, culture, and health, but also involve some winning projects in the fields of finance, transportation, and energy. For example, the "2023 Rural Credit Silver Storage System Old Equipment Replacement Procurement Project" of the Rural Credit Silver Fund Clearing Center, valued at 6.1 million yuan; the "Server Storage Procurement Project" of the Xinjiang Production and Construction Corps Petroleum Co., Ltd., valued at 783,600 yuan, the procurement requirements include specific products such as distributed storage, storage network switches, virtualization management software, server memory sticks, and server network cards.

According to industry insiders' observation, after a relatively strong procurement cycle from 2022 to the first half of 2023, the financial industry's storage procurement efforts have slightly decreased this year. Some small and medium-sized financial institutions at the prefecture level still have procurement needs for storage, but the large national central banks have shifted their focus to computing power this year, and the next cycle of storage procurement is still in the planning process.It is undeniable that the manufacturing industry has also been a major purchaser in the storage market this year. Yang Yunxu, Research Manager at IDC China, told Shuzhi Frontline that the procurement demand of the manufacturing industry has continued from 2023 to the present, whether it is internal circulation or supply to the global market, the manufacturing industry is recovering its procurement demand. For example, food manufacturers such as Yili Group, automobile manufacturers such as BYD, and footwear and apparel manufacturing enterprises all have stable procurement needs for storage systems.

"The procurement demand of the manufacturing industry is gradually shifting towards distributed systems," said Yang Yunxu. Taking automobile manufacturing as an example, core or AI-related business still has a stable procurement demand for high-end all-flash storage, smart parks and industrial control systems increase procurement demand for distributed storage solutions, and the needs for production data security and compliance will direct procurement towards backup systems.

"In the first half of 2024, the Chinese enterprise storage market showed higher growth than expected," IDC China Research Manager Yang Yunxu told Shuzhi Frontline. One of the major growth drivers comes from the recovery of domestic circulation in the domestic market, industries such as manufacturing, transportation, large government, and telecommunications have all seen a significant increase in storage procurement demand.

03 The head effect is obvious, and the localization of storage is further accelerated

In the first eight months of 2024, although the specific bidders covered are very extensive and diverse, from the brands involved in the final bids, a clear head effect is shown.

The storage products of foreign manufacturers such as Dell, HP, and IBM still have a high frequency of appearance. Especially Dell, there are at least more than 10 projects where the final transaction bids include Dell's related storage products.

However, compared to foreign brands, in the past one or two years, the trend of storage localization is becoming more apparent. Domestic brands such as Huawei, H3C, Inspur Information, Sugon, Lenovo, ZTE, and Deep Information have already occupied the mainstream.

For example, Huawei, with "Huawei Technologies Co., Ltd." as the bidding entity, has won at least 11 projects, and these projects are all bid by the three major operators China Telecom, China Mobile, and China Unicom. In the top three projects with the highest amount (all winning bids exceed 80 million yuan), there is also a presence of Huawei. In addition, there are more than 50 storage projects involving Huawei-related products.

Huawei's public data also provides evidence from the side. In the first half of 2024, Huawei's commercial market data storage business revenue increased by 75% year-on-year, the number of partners increased by 37%, and the number of customers increased by 49%. Industry observers note that Huawei is currently vigorously promoting the "Flash Storage Inclusive" initiative, which is expected to accumulate more product advantages in the small and medium customer market.

Inspur Information, H3C, Sugon, Lenovo, ZTE, and other companies have also either won large orders themselves or appeared in the procurement lists of many projects.For instance, the "Inner Mongolia Radio and Television Station's Whole Station Program Production, Broadcasting System (Basic Resource Platform) Project," valued at 12.74 million yuan, was directly awarded to New H3C Technologies Co., Ltd. The procurement targets include dual-active storage, distributed storage, storage access switches, and many other products. ZTE, Sugon, and New H3C also directly won two large-scale centralized procurement projects from China Mobile, each worth over 80 million yuan.

"The application of domestic components is driving a new round of procurement, with a clear demand for ARM-based products and other X86 components," Yang Yunxu, Research Manager at IDC China, told Shuzi Qianxian. This is also one of the main drivers for the unexpected high growth in the storage market in the first half of this year.

04 All-flash storage becomes a choice for more users

Since the beginning of this year, the accelerated deployment of AI large models and the construction boom of smart computing centers have put forward new requirements for storage, including Huawei, New H3C, Inspur Information, Sugon, and other leading infrastructure companies, as well as cloud vendors such as Alibaba Cloud, Tencent Cloud, and Baidu Intelligent Cloud. They are all optimizing and enhancing storage products in terms of high performance, multi-protocol, customization, and high security to meet these new demands.

Under this background, all-flash storage is also becoming a choice for more users. In the incomplete statistics of 375 winning projects by Shuzi Qianxian, at least 20 projects explicitly included the procurement of all-flash storage products, and the industries of the procurers were very broad, covering hospitals, governments, finance, operators, scientific research, and many other fields. Among them, hospitals had the most orders, with 11, contributing to more than half of the projects.

Looking at the main targets, the procurement of all-flash storage currently shows a clear head effect, with products from domestic storage giants such as Huawei, New H3C, and Lenovo凌拓 being purchased more, for example, there are at least 11 projects involving Huawei's all-flash storage products. Dell, IBM, and others are also brands that are being focused on for procurement.

In addition to these projects, industries such as energy and transportation also have procurement of all-flash storage products, such as the procurement completed by CNOOC (China) Limited Tianjin Branch in September for the "2024 Scientific Research Hardware - NAS All-flash Storage New Purchase and Existing Storage Expansion" project, and the "All-flash Storage and Other Information Equipment Project" completed by China Railway Hohhot Bureau Group Co., Ltd.

All-flash storage is divided into two categories, centralized all-flash and distributed all-flash. Centralized all-flash is mainly suitable for high-performance computing and high IOPS scenarios, such as gene sequencing. Distributed all-flash, with the development of software-defined storage and hyper-converged infrastructure, is supporting more scenarios like generative AI.

According to IDC statistics, although all-flash storage accounts for nearly 40% of global storage shipments, it is only 25% domestically, "possibly accounting for 35% in centralized storage," but as component prices gradually stabilize, user work scenarios pay more attention to performance, and manufacturers such as Huawei and Inspur increase their own SSD production, the deployment capacity of SSD is gradually increasing, and the growth of all-flash storage is expected to continue to develop rapidly ahead of the average market growth rate, becoming a major trend in the future.

Faced with this certain trend, all companies are accelerating the layout of all-flash products. In May, Inspur Information released the distributed all-flash storage AS13000G7-N series, which is specifically optimized for large models; in June, Sugon Storage announced the upgrade of distributed storage ParaStor and officially released the world's first hundred-million-level IOPS centralized all-flash storage FlashNexus... and Huawei also launched a new generation of OceanStor Dorado all-flash storage in September, claiming to have ultimate performance, ultimate resilience, and AI-Ready capabilities.