Data Center Infrastructure Market is Low Growth, but Public Cloud Blossoms

RENO, NV, September 18, 2017

New Q2 data from Synergy Research Group shows that over the last 24 months, quarterly spend on all data center hardware and software has grown by just 5%, while spending on the public cloud portion of that has grown by 35%. The private cloud infrastructure market has also grown, though not as strongly as public cloud, while spending on traditional, non-cloud data center hardware and software has dropped by 18%. ODMs in aggregate account for the largest portion of the public cloud market, with Cisco being the leading individual vendor, followed by Dell EMC and HPE. The Q2 market leader in private cloud was Dell EMC, followed by HPE and Microsoft. The same three vendors led in the non-cloud data center market, though with a different ranking. Total data center infrastructure equipment revenues, including both cloud and non-cloud, hardware and software, were over $30 billion in the second quarter, with public cloud infrastructure accounting for over 30% of the total. Private cloud or cloud-enabled infrastructure accounted for over a third of the total. Servers, OS, storage, networking and virtualization software combined accounted for 96% of the Q2 data center infrastructure market, with the balance comprising network security and management software. By segment, HPE is the leader in server revenues, while Dell EMC has a strong lead in storage and Cisco is dominant in the networking segment. Microsoft features heavily in the rankings due to its position in server OS and virtualization applications. Outside of these four, the other leading vendors in the market are IBM, VMware, Huawei, Lenovo, Oracle and NetApp.

“With cloud service revenues continuing to grow by over 40% per year, enterprise SaaS revenue growing by over 30%, and search/social networking revenues growing by over 20%, it is little wonder that this is all pulling through continued strong growth in spending on public cloud infrastructure,” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group. “While some of this is essentially spend resulting from new services and applications, a lot of the increase also comes at the expense of enterprises investing in their own data centers. One outcome is that public cloud build is enabling strong growth in ODMs and white box solutions, so the data center infrastructure market is becoming ever more competitive.”