China's external disk storage market reached US$527 million in the second quarter of 2016, up 7.2% on year, according to the latest IDC PRC Provincial External Storage System Tracker. Sales fell by varying degree in both the low-end (<25k) and high-end (>250k) markets, while the midrange (25k-250k) market saw fast growth, up 32.2% on year to US$255 million. Huawei, the top vendor in the mid-range market, saw sales grow 169.2%, helping it to secure 27.8% of this market. The fast growth of Sugon, Macrosan and Inspur in recent quarters has intensified competition in the mid-range storage market.

Huawei, EMC, Hikvision, Inspur, and IBM were the top-5 vendors in China's external disk storage market in the second quarter of 2016, each with a market share of more than 5%, according to the report. Inspur joined the ranks of the top-5 vendors for the first time thanks to its collaboration with several local governments in cloud computing and fast expansion of its channel system. Other local vendors such as Sugon, Macrosan and Tongyou also grew fast as a result of their expansion in government, education and other segments.

Frank Cai, a storage market analyst at IDC China, said that "In the future, China's external disk storage market will continue to post growth in various sectors and localities. In today's world of digital transformation, important corporate data will provide more value. The external storage disk as a core system supporting business operations and development will remain in fast growth."

The fast growth of government, finance, education, healthcare and media sectors was the main driver of market growth in the second quarter. For the first time since 2014, the financial industry achieved faster quarterly growth than the market as a whole on an on-year basis. Since the beginning of 2016, the financial industry, spearheaded by large banks, has started a new round of comprehensive, large-scale product updates, fueling fast growth in the mid-range and high-end markets. In addition, stable demand for scale-out storage also drove fast market expansion in the media and education sectors.

Government investment in the external disk storage field remains an important engine driving overall market growth. In the second quarter of 2016, public security, taxation and meteorological bureaus all saw a notable increase in government inputs. Currently, the public security sector accounts for 33.3% of total government inputs. The demand for public security will continue to spread to low-tier cities and towns. In addition, as governments at all levels migrate to the cloud, there will be more external disk storage procurements. One issue that all vendors must address is how to collaborate with governments in their move to the cloud, IDC believes.