Report: Cloud providers drive jump in Q3 data center spend while enterprise declines

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Spending on hardware and software data center infrastructure is up 2% year-over-year thanks in large part to cloud providers, according to Synergy Research Group. (Pixabay)

Worldwide spending on data center hardware and software was up 2% year-over-year thanks to cloud providers' largesse, according to a report.

Synergy Research Group's report said spending on public cloud infrastructure jumped 21% in Q3 to post an all-time high. While cloud providers continued to fork out money to invest in data centers, enterprises' data center infrastructure spend dropped 8% year-over-year, which marked the third consecutive quarter of declines.

Total data center infrastructure equipment revenues, including both cloud and non-cloud hardware and software, were $40.5 billion in the third quarter, with public cloud infrastructure accounting for 43% of that total.

In terms of market share, ODMs (original design manufacturers) in aggregate accounted for the largest portion of the public cloud market, with Huawei, Dell and Inspur battling neck and neck to be the top vendor. The Q3 market leaders in enterprise infrastructure were Dell and Microsoft, with HPE, Cisco and VMware following at a distance.

The hardware segments of servers, storage and networking in aggregate accounted for 76% of the data center infrastructure market while operating systems (OS), virtualization software, cloud management and network security account the rest.

Dell was tops for server and storage revenues, while Cisco was dominant in the networking segment. Microsoft featured heavily in the rankings due to its position in server OS and virtualization applications, according to Synergy Research Group.

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Outside of those three, the other leading vendors in the market were HPE, Huawei, Inspur, VMware, Lenovo and IBM.

“The total data center equipment market is in a reasonably steady state, with growth over the last six quarters averaging 2%, but the mix of spending by public cloud providers and enterprises continues to shift substantially in favor of cloud,” said John Dinsdale, a chief analyst at Synergy Research Group. “The cloud provider share of the total has increased by around 2 percentage points in each of the last three quarters, which represents a fairly dramatic change in such a massive market.

"The shift towards cloud was happening prior to that, but at a much more gradual pace. It almost goes without saying that COVID-19 has been a catalyst behind that change in trajectory.”