Cloud data center spend jumps as on-prem spend falls

Spend on cloud data center technology has risen dramatically according to new data from Synergy Research Group – but on-premise equipment spend has plunged.

Synery Research says over the last 24 months, quarterly spend on all data center hardware and software grew just 5%, with total data center infrastructure revenue hitting more than US$30 billion in the second quarter of 2017.

Within that, public cloud spend jumped 35% and now accounts for 30% of the overall market, with ODMs, Cisco, Dell EMC and HPE among the market leaders.

Private cloud was also up a respectable 16%, while traditional non-cloud spend- lead by Microsoft, Dell EMC, HPE and Cisco – dropped back 18%.

Synergy Research says private cloud or cloud-enabled infrastructure, where Dell EMC, HPE, Microsoft and Cisco are the leaders, now accounts for over one-third of the overall total.

Servers, operating systems, storage, networking and virtualisation software combined accounted for 96% of the Q2 data center infrastructure market, with network security and management software making up the balance.

John Dinsdale, Synergy Research Group chief analyst and research director, says "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 thorugh continued strong growth in spending on public cloud infrastructure.

Dinsdale says while some of that is essentially spend resulting from new services and applications, a lot of the increase has come 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, os the data center infrastructure market is becoming ever more competitive," he adds.

ODMs in aggregate account for the largest portion of the public cloud market, with Cisco the leading individual provider, followed by Dell EMC and HPE.

Dell EMC lead the private cloud market in Q2, followed by HPE and Microsoft.

When it comes to the individual segments, HPE is leading server revenues, with Dell EMC holding a strong lead in storage and Cisco dominant in networking.

Synergy Research says Microsoft features heavily in the rankings due to its position in server OS and virtualisation applications.

Other leading vendors in the market include IBM, VMware, Huawei, Lenovo, Oracle and NetApp, Synergy says.