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Public cloud demand may be growing by leaps and bounds, but the overall market for data center hardware and software is expanding at a more moderate pace, according to Synergy Research Group's latest analysis.
Quarterly spending on data center hardware and software products has risen just five percent over the past 24 months, observed the analyst firm after crunching numbers for the second-quarter (Q2) 2017. Of that growth, public cloud and private cloud spending jumped 35 percent and 16 percent. Meanwhile, revenue from traditional, non-cloud data centers dropped 18 percent.
"Spending on hardware and software used to build public cloud continues to grow strongly, while spending on traditional non-cloud infrastructure is on the decline," said John Dinsdale, chief analyst and research director at Synergy Research Group. "With own-designed hardware manufactured by ODMs [original design manufacturers] now being such a big feature of public cloud infrastructure, these trends are ratcheting up the competitive pressure on the mainstream server, storage and networking vendors."
Selling their wares directly to data center customers, particularly of the hyperscale variety, ODMs ruled the public cloud infrastructure market as a group during Q2. And they may continue to rule for several more quarters to come.
In a recent Synergy Research forecast, the firm noted that the world's 24 hyperscale companies operate 360 cloud data centers, a figure that is rising by nearly 20 percent each year. Those data centers will help cloud services and software-as-a-service (SaaS) providers cross the $200 billion revenue milestone in 2020.
On the server front, ODMs enjoyed a narrow lead in Q2, collectively raking in $3.5 in revenue and claiming 22.6 percent of the market, reported IDC last week. HPE and its Chinese joint venture New H3C Group took second place with $3.3 billion in sales and a 21.3-percent share of the market.
Cisco was top individual vendor in Q2, followed by Dell EMC and Hewlett Packard Enterprise (HPE), said Synergy Research. Dell EMC turned the tables in the private cloud infrastructure space, by placing first in Q2, followed by HPE and Microsoft.
In total, sales of data center infrastructure equipment—including public, private and non-cloud data centers investments—exceeded $30 billion, said Synergy Research. Combined, servers, storage, operating system software and virtualization software, made up the bulk (96 percent) of all sales.
HPE was the server vendor to beat while Dell EMC was the enterprise data storage systems leader. Cisco remained the top networking equipment provider in Q2, according to Synergy Research's data.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.