Cisco is gaining market share and revenue, Dell is losing both and HPE is losing market share in 3Q 2016 market estimates from International Data Corp.

Mitch Wagner, Executive Editor, Light Reading

January 17, 2017

5 Min Read
Cisco Gains, Dell & HPE Lose on Cloud Infrastructure - Analyst

Cisco is gaining revenue and market share providing cloud infrastructure, while Dell and HPE are losing ground, according to a recent report from analysts International Data Corp.

Cisco had 12.2% market share in the third quarter of 2016, and $1.03 billion revenue, compared with 9.8% share and $766 million revenue in the year-ago quarter, IDC said in a statement released last week. That's a revenue increase of a hefty 34.2%.

Dell and Hewlett Packard Enterprise are losing ground but they're still the guys to beat for cloud infrastructure. Dell Technologies (Nasdaq: DELL) generated $1.3 billion revenue and had 15.5% market share in the third quarter 2016, compared with $1.37 million revenue and 17.6% market share in 3Q 2015. Dell revenue dropped 5% year-over-year for cloud infrastructure, IDC says.

And HPE had $1.25 billion revenue and 14.9% market share in the third quarter of 2016, compared with $1.247 billion and 16% market share, a gain of 0.2% for cloud infrastructure. So revenue for HPE was essentially flat, but the company lost about a point of market share.

The biggest winner for cloud infrastructure -- albeit coming from a small base -- was Huawei. The Chinese vendor saw $297 million revenue in the third quarter of 2017, up a whopping 68.4% year-over-year from 2016's $163 million. Its market share was 3.3%, up from 2.1% in the previous year, IDC says.

Networking vendors are moving into the enterprise cloud market, and shouldering aside traditional networking incumbent, as our colleagues at note. (See Networking giants thunder into cloud infrastructure game.)

Overall, vendor revenue grew 8.1% year-over-year to $8.4 billion for the third quarter of 2016, IDC says. It's counting infrastructure products, including servers, storage and Ethernet switches.

Cloud comprised $39.2% of all IT infrastructure spending in the third quarter, up from 34.7% a year ago, with revenue from traditional, non-cloud infrastructure declining 10.8% year-over-year.

IDC has estimates for other vendors, and other information, in a statement.

IDC also shared projections for this year. Spending on cloud computing infrastructure will reach $44.2 billion in 2017, with the majority of that money earmarked for spending on public cloud services, as well as the data center that support the technology.

That $44.2 billion number is an increase of more than 18% compared to 2016. Over the next several years, IDC predicts that spending on cloud infrastructure will sustain a compound annual growth rate (CAGR) of 14.2% as more workloads move to the cloud, whether its public or private.

While the IDC numbers show that cloud spending is on the upswing, traditional IT infrastructure is still where the majority of IT dollars go. While non-cloud infrastructure spending will decline about 3% this year, it still accounts for 57% of all spending by enterprises, as well as smaller businesses, but that will change in the coming years. (See Mid-Market Will Be Cloud's Next Wave.)

However, the biggest beneficiary of this shift is the public cloud, which is dominated right now by Amazon Web Services, with Microsoft, Google and other firms in distant second place. Of that $44 billion in spending this year, 61.2% will flow to public cloud providers.

Figure 1: (Source: ElasticComputeFarm via Pixabay) (Source: ElasticComputeFarm via Pixabay)

Private cloud spending will make up 14.6% of all spending, especially as hybrid cloud gains in popularity within the enterprise. (See IaaS, PaaS Drive Cloud Market)

"In the coming quarters, growth in spending on cloud IT infrastructure will be driven by investments done by new hyperscale datacenters opening across the globe and increasing activity of tier-two and regional service providers," Natalya Yezhkova, an IDC analyst wrote in the Jan. 13 report. "Another significant boost to overall spending on cloud IT infrastructure will be coming from on-premises private cloud deployments as end users continue gaining knowledge and experience in setting up and managing cloud IT within their own datacenters."

The IDC numbers also show that not only is cloud spending increasing across all different regions, the spending on traditional IT is shrinking at the same time, which supports other reports that show how the cloud is taking over all aspects of enterprise computing -- whether large-scale or small -- and that the technology can support a wide-range of businesses across the spectrum.

Looking out to 2020, IDC expects this trend to continue, with public cloud continuing to reap the benefits over the next three years.

Want to know more about the cloud? Visit Light Reading Enterprise Cloud.

Over the next several years, IDC is predicting a 14.2% CAGR for what it calls "off-premises cloud IT infrastructure," with the marketing hitting $48 billion by 2020. About 80% of this money will flow toward the data centers that support public cloud services.

Figure 2: (Source: IDC) (Source: IDC)

In addition, by 2020, cloud spending will surpass traditional infrastructure spending, meaning the full transformation to enterprise cloud infrastructure is only a few years away. (See Hybrid Cloud Will Be a Battlefield & Other Cloud Predictions)

In terms of what IT departments are using their budget dollars for this, IDC finds that Ethernet switches are the fastest growing segments of the market, with spending increasing nearly 24% compared to 2016.

At the same time, spending on storage is increasing 23.7%, while server spending is increasing by 13.6%, according to IDC.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud and Scott Ferguson, Editor, Enterprise Cloud. Follow Scott on Twitter @zdeferguson.

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About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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