Just a month ago, research emerged which indicated on-premises data centre investments were dropping in priority as companies moved to the cloud. Now a second report confirms the finding that companies are de-emphasising their on-premises data centres in favour of the cloud.
Spend drop
The numbers come from Synergy Research, which show that spending on traditional, non-cloud data centre hardware and software dropped 18% between the second quarters of 2015 and 2017. During that same period, public cloud spending grew 35%. The overall market for data centre equipment grew by 5% to a total of more than $30 billion (€25.2 billion).
“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, chief analyst and research director for Synergy Research Group, in a statement.
While the on-premises business continues to shrink, three vendors, Cisco, Hewlett Packard Enterprise and Dell EMC, are fighting it out for the public cloud infrastructure market, according to the survey. In the public cloud market, Cisco is the dominant vendor, not surprising given its emphasis on networking equipment. In private cloud, Dell EMC is the dominant vendor, followed by HPE and Microsoft.
Non-brand servers
The Synergy report also noted that there is a healthy market for non-brand-name server equipment by original design manufacturers (ODMs). The ODM market is actually bigger than the brand name gear, as companies follow the leads of Google and Facebook, which built “white box” or unbranded servers rather than spring for the more expensive servers from HPE and Dell.
“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 centres. One outcome is that public cloud build is enabling strong growth in ODMs and white box solutions, so the data centre infrastructure market is becoming ever more competitive,” said Dinsdale.
Outside of Cisco, Dell EMC, HPE and Microsoft, Synergy noted IBM, VMware, Huawei, Lenovo, Oracle and NetApp were also significant players in the market but did not specify.
Lenovo, which purchased IBM’s x86 server business three years ago and has struggled to make significant in-roads. It is not for a lack of trying. The company announced some significant hardware initiatives and hired some big names to lead the group, but a CRN story indicated customers are leery of the Chinese firm simply because of the bad image China has.
IDG News Service
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