2016 IT spending cemented shift to cloud and security
10 January 2017 | 0
How did enterprise infrastructure spending fare in 2016? A wee bit down.
According to an analysis from Synergy Research Group, while many individual categories for enterprise IT infrastructure saw growth, a few key segments plunged heavily to bring overall spending down by 1%.
Much of that drop was due to steep declines in three categories that have long been decaying, and 3 to 8% growth in other categories was not quite enough to offset the general loss.
Of the big winners, the second biggest jump was in network security (up 4%), as everything from ransomware to a nonstop barrage of hardware-level exploits have demanded enterprises step up their efforts. WLAN vendors saw the biggest percentage leap: almost 8%.
That said, these leaps were in markets that remain relatively small. WLAN’s worldwide market size is slightly more than $4 billion (€3.8 billion); network security clocks in at around $10 billion (€9.4 billion).
But when it comes to the two biggest market segments for enterprise IT spending — data centre servers, and switches and routers — the lack of growth there was felt strongly. Network hardware, around $27 billion (€25.5 billion) a year, barely edged out 1% growth, while data centre servers lost a whopping 5% — a huge slice for a market that is a $31 billion-a-year (€29.2 billion) business.
The declines are not hard to trace. As more IT is either migrated into the cloud or done there natively to begin with, there’s less of a demand by rank-and-file enterprise IT for conventional hardware. There is still clearly demand for networking devices, as you need that hardware to connect to your cloud data centre in the first place, but the big leap in WLAN sales points toward a growing market for supporting that connectivity in-house.
Two other areas that were hit hard in 2016 have both been losing out for a while. Enterprise voice systems — long on the wane since the arrival of unified communications (UC) systems and open source solutions like Asterisk — with a $7.5 billion (€7.1 billion) market share dropped about another 5.5%. Telepresence, a $2 billion (€1.8 billion) market that shrank 6% of its growth, has been dying off not only because of UC, but also because of consumer-level, commodity solutions like Skype. (UC itself, with a world market share about the size of WLAN’s, perked up by another 3%.)
If there is a single name that continues to dominate across all these different segments, and that is Cisco, says Synergy. The networking giant commands 33% of the total market share, or “market leads in six of the seven segments.” In the number 2 slot overall is HP Enterprise (16% market share), which has the mixed honour of being number 1 in data centre servers — the one category with both the biggest market share and some of the biggest losses across all the categories. Between those two, Cisco stands a slightly better chance of weathering the continued flight of enterprise IT to the cloud, since it can operate well on either side of that divide.
IDG News Service