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CCI
Friday, 15 January 2016 16:08

Cloud infrastructure spend grew by 23% in the third quarter 2015

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The last quarter of 2015 saw a $7.6 billion (£5.3 billion) surge in spending on cloud infrastructure as businesses finally took the leap and went for the cloud in a big way with HP, Dell and Cisco seeing double-digit growth.

According to analysts IDC, worldwide vendor revenue from sales of infrastructure products (server, storage, and Ethernet switch) for cloud IT, including public and private cloud, grew by nearly a quarter (23%) year-on-year to $7.6 billion (£5.3 billion) in the third quarter of 2015 (3Q15).

The overall share of cloud IT infrastructure sales climbed to 33.8% in 3Q15, up from 28.7% a year ago with public cloud seeing the majority of the revenue and growth. Infrastructure sales to private cloud grew by 18.8% to $2.9 billion (£2.0 billion), and to public cloud by 25.9% to $4.6 billion (£3.3 billion). In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased by -3.2% year-on-year in the third quarter, with declines in all three technology segments (server, storage and Ethernet switch).

The growth in spend was fastest in Japan at 47.1% year-on-year, followed by Asia/Pacific (excluding Japan) at 35.3%, Western Europe at 22.1%, Canada at 22.0%, and the United States at 20.1%. Central and Eastern Europe declined at -10.2% as the region continues to go through political and economic turmoil, which impacts overall IT spending.

Explaining the sudden growth Kuba Stolarski, Research Director for Computing Hardware and Platforms at IDC said. "Customers are modernising their infrastructures, having a progressively larger number of viable options for cloud deployments either on or off premises. These customers depend on a mix of as-a-service offerings and traditional infrastructure to help meet the IT transformation requirements of their organizations. “

Adding “As public cloud offerings continue to evolve and improve in reliability and security, customers are becoming more comfortable with the flexibility that they get by deploying certain workloads in these elastic environments."

In the race for infrastructure HP, Dell and Cisco have all seen double-digit growth with HP (this is pre- and post-split into HPE and HP) bagging an enormous 28% growth and $1.18 billion (£824 million) revenue compared to the same quarter in the previous year, with HP in second place with 20.7% growth and  $783 million (£547 million). 

Top 5 Corporate Family, Worldwide Cloud IT Infrastructure Vendor Revenue, Q3 2015
(Revenues are in Millions, Excludes double counting of storage and servers)
Vendor 3Q15 Revenue
(US$M)
3Q15 Market
Share
3Q14 Revenue
(US$M)
3Q14 Market
Share
3Q15/3Q14
Revenue
Growth
1. HP $1,184 15.7% $925 15.0% 28.0%
2. Dell* $783 10.4% $649 10.6% 20.7%
2. Cisco* $731 9.7% $596 9.7% 22.6%
4. EMC $548 7.2% $511 8.3% 7.4%
5. NetApp* $259 3.4% $263 4.3% -1.3%
5. IBM* $256 3.4% $441 7.2% -41.9%
5. Lenovo* $250 3.3% $30 0.5% 744.9%**
ODM Direct $2,226 29.4% $1,800 29.3% 23.6%
Others $1,328 17.5% $935 15.2% 42.0%
Total $7,565 100% $6,149 100% 23.0%
IDC's Worldwide Quarterly Cloud IT Infrastructure Tracker, January 2016

The others not mentioned in the top five include self-build solutions through original design manufacturers (ODMs) and solutions provided by value-added integrators (VAIs).

Commenting on the infrastructure figures Richard Davies, CEO at ElasticHosts noted that while the growth is good he warned that buying infrastructure may be buying infrastructure that they may never use. “Most public cloud providers offering VM-based cloud services are charging customers for capacity that they aren't even using. According to some independent research from Vanson Bourne, businesses use just half (51%) of the capacity they provision over a 24/7 cycle, but 90% see over-provisioning as a necessary evil. “

* IDC declares a statistical tie in the worldwide cloud IT infrastructure market when there is less than one percent difference in the revenue share of two or more vendors.

** IBM's divestiture of its x86 business to Lenovo on October 1, 2014 has a highly positive impact on year over year comparisons for Lenovo for 2Q15

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