Building Blocks: Breaking Down The Cloud Infrastructure Market

The Cost Of Cloud

Over the past two years, an average of $29 billion per quarter has been spent on data center infrastructure -- servers, operating systems, storage, networking, and virtualization software combined for roughly 95 percent of that spend, with network security and cloud management tools accounting for the remaining almost $1.5 billion.

That data center spend is "being increasingly driven by the cloud," noted Synergy Research Group in its latest report, with cloud deployments or shipments of cloud-enabled systems accounting for more than half of the market's total sales.

Synergy Research Group looked at the market share of top vendors in the space and found Hewlett Packard Enterprise, Cisco Systems and Microsoft continue to lead in the three main segments – private cloud hardware, public cloud hardware and cloud infrastructure software.

Spending on public cloud services is increasing by 50 percent each year, and Software-as-a-Service by 30 percent. But enterprises are also spending much more on building private clouds in their data centers as they realize the benefits of flexible and agile IT technology, said Jeremy Duke, Synergy Research Group's founder and chief analyst, in the report.

Public Cloud Hardware

Selling infrastructure equipment to public cloud operators is one of the most important businesses for legacy hardware vendors.

Cisco leads in that desirable market, with slightly less than 15 percent total share. Hewlett Packard Enterprise maintains more than 10 percent share, and Dell comes in third with about 6 percent.

Cisco maintains this lead through its dominance in networking and its rapidly growing server product line, according to Synergy.

Private Cloud Hardware

While Synergy didn't break down the division of the overall cloud infrastructure market, the current size of the public and private segments is roughly in the same ballpark, chief analyst John Dinsdale told CRN.

But the hardware leaders flip positions on the private side of the cloud, with Hewlett Packard Enterprise dominating with roughly 22 percent share, and Cisco in second with about 16 percent. Dell again comes in third with roughly 12 percent share.

HPE maintains this advantage with a clear lead in the cloud server segment and as an important challenger in storage, said Synergy.

Cloud Software

While sales of software to cloud providers doesn't approach the scale of those involving hardware, Synergy's Dinsdale told CRN that component of the infrastructure market is still lucrative for software vendors.

Microsoft is the dominant developer in that arena, with more than 40 percent share. VMware comes in second with almost 20 percent share of software sales to cloud builders.

Microsoft dominates in the ranking due to its position in server operating systems and virtualization applications, according to Synergy.

Overall Leaders

Total revenue for cloud infrastructure components, both hardware and software, reached well more than $60 billion in 2015, according to a previous Synergy report.

Across all segments, Hewlett Packard Enterprise squeaked by as the leader in cloud infrastructure sales with 13 percent market share. Cisco remained on HPE's heels with 12 percent share. While HPE slightly widened the gap between the two in the first quarter, both vendors gained share.

Software powerhouse Microsoft won 7 percent of the overall cloud infrastructure market, a virtual tie with Dell. And IBM rounded out the top five with a 5 percent share.

Dell and IBM maintain a strong position across a range of cloud technology markets.

EMC, VMware, Lenovo and Huawei trailed the pack.