Cloud Infrastructure Market Hits $70B in Revenue

While the public cloud is all about abstracting the physical hardware and servers needed to deliver applications and services, the reality is that hardware is required. The cloud infrastructure equipment market is an increasingly competitive space, with no single clear industry leader at this point.

According to Synergy Research Group’s 4Q16 market data report, at the end of 2016 the total market for both public and private cloud hardware and software revenues topped the $70 billion revenue milestone.

Of particular note is the extreme competition in the cloud infrastructure equipment market. The top three vendors are locked in a three-way tie for market share. Hewlett Packard Enterprise (HPE), Cisco and Dell EMC each hold approximately 11.5 percent of the total market share.

Each of the top three vendors however has a different area of revenue share leadership. According to Synergy Research Group, HPE is the leader in the cloud servers, Cisco is the leader in the networking segment, and Dell EMC leads in storage.

“Putting to one side the chunk of the market that is now sidelined and controlled by ODMs, the rest of the market is being heavily contested by the three leading IT hardware vendors,” John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group, said in a statement. “While spend on cloud services and infrastructure is already huge, it is still relatively early days in the transition of enterprise workloads to the cloud.”

Dinsdale added, “that means that success in the cloud infrastructure market is vitally important to IT vendors and they will be fighting long and hard to maximize their market shares.”

Analyst firm IDC had forecast a year ago that cloud infrastructure revenue would hit $38.2 billion for 2016. Looking forward, IDC forecasts a projected $57.8 billion will be spent on cloud in 2020.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.