Cloud hardware spend hits US$8.4bn/quarter, as traditional kit sinks

2017 forecast to see cloud kit clock $11bn every 90 days

Abacus-shuffling outfit IDC has updated its Worldwide Quarterly Cloud IT Infrastructure Tracker with sales data for Q3 2016 and predictions for spend in 2017.

In 2016's third quarter the firm says “vendor revenue from sales of infrastructure products (server, storage, and Ethernet switch) for cloud IT, including public and private cloud, grew by 8.1 per cent year over year to $8.4 billion.” Don't get too excited: IDC says that growth happened without a spurt in hyperscale builds.

“The overall share of cloud IT infrastructure sales climbed to 39.2 per cent of all IT infrastructure spending in 3Q16, up from 34.7 per cent a year ago,” the firm says. Of that lovely loot, private cloud accounted for $3.3 billion with the rest going to public clouds.

On the flipside, “revenue in the traditional (non-cloud) IT infrastructure segment decreased 10.8 per cent year over year in the third quarter.”


The firm says Ethernet switches were the star in Q3, clocking up 60.8 per cent year-over-year growth on-premises and 46.2 per cent in the public cloud. On-premises server sales sank by 12.9 per cent year over year and storage slumped by 8.6 per cent.

As 2017 unfurls, IDC reckons a new wave of hyperscale data centre builds, plus service providers building their own clouds, will see cloud hardware spend “increase by 18.2 per cent … to reach $44.2 billion.”

Most of that moolah (61.2 per cent) will go to public clouds, with another 14.6 points to be spent on “off-premises private cloud environments”.

On-premises players are going to have a harder time of it as “spending on traditional, non-cloud, IT infrastructure will decline by 3.3 per cent in 2017.”

It's not all doom and gloom, though, as on-prem kit will “still account for the largest share (57.1 per cent) of end user spending. IDC counts private clouds as on-prem kit and reckons those rigs “will grow faster than public cloud while investments on non-cloud infrastructure will decline.”

As the table below shows, Dell and HPE are duking it out at the top of the market, with Cisco a close third. Lenovo's numbers are interesting: this time last year the company had $250m of revenue after gobbling IBM's server unit. This year it's added just $47m, just 0.2 per cent market share and is growing far slower than the three aforementioned companies. Huawei, by contrast, can point to 68.4 revenue growth.

Top 5 Vendor Groups, Worldwide Cloud IT Infrastructure Vendor Revenue, Q3 2016 (Revenues are in Millions, Excludes double counting of storage and servers)

Vendor Group

3Q16 Revenue (US$M)

3Q16 Market Share

3Q15 Revenue (US$M)

3Q15 Market Share

3Q16/3Q15 Revenue Growth

1. Dell Technologies*






1. Hewlett Packard Enterprise*






3. Cisco






4. Lenovo*






4. Huawei*






4. NetApp*






4. Inspur*






ODM Direct


















IDC's Worldwide Quarterly Cloud IT Infrastructure Tracker, January 2017

* Table Note: Dell Technologies and Hewlett Packard Enterprise ranked number 1 in a statistical tie; Lenovo, Huawei, NetApp, and Inspur all ranked number 4 in 3Q16 in a statistical tie. 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.

IDC doesn't say why switches are doing so well: The Register's cloud desk reckons it's because ultra-dense cloud rigs just can't be built with old switches and that cloud builds necessitate lots of expensive top-of-rack kit, plus lovely new backbones. ®

Other stories you might like

  • IT downtime not itself going down, power failures most common cause
    2022 in a nutshell: Missing SLAs, failing to meet customer expectations

    Infrastructure operators are struggling to reduce the rate of IT outages despite improving technology and strong investment in this area.

    The Uptime Institute's 2022 Outage Analysis Report says that progress toward reducing downtime has been mixed. Investment in cloud technologies and distributed resiliency has helped to reduce the impact of site-level failures, for example, but has also added complexity. A growing number of incidents are being attributed to network, software or systems issues because of this intricacy.

    The authors make it clear that critical IT systems are far more reliable than they once were, thanks to many decades of improvement. However, data covering 2021 and 2022 indicates that unscheduled downtime is continuing at a rate that is not significantly reduced from previous years.

    Continue reading
  • Digital sovereignty gives European cloud a 'window of opportunity'
    And US hyperscalers want to shut it ASAP, we're told

    OpenInfra Summit The OpenInfra Foundation kicked off its first in-person conference in over two years with acknowledgement that European cloud providers must use the current window of opportunity for digital sovereignty.

    This is before the US-headquartered hyperscalers shut down that opening salvo with their own initiatives aimed at satisfying regulator European Union, as Microsoft recently did – with President Brad Smith leading a charm offensive.

    Around one thousand delegates turned out for the Berlin shindig, markedly fewer than at CNCF's Kubecon in Valencia a few weeks earlier. Chief operating officer Mark Collier took to the stage to remind attendees that AWS' CEO noted as recently as this April that 95 per cent of the world's IT was not spent in the cloud, but on on-premises IT.

    Continue reading
  • IBM buys Randori to address multicloud security messes
    Big Blue joins the hot market for infosec investment

    RSA Conference IBM has expanded its extensive cybersecurity portfolio by acquiring Randori – a four-year-old startup that specializes in helping enterprises manage their attack surface by identifying and prioritizing their external-facing on-premises and cloud assets.

    Big Blue announced the Randori buy on the first day of the 2022 RSA Conference on Monday. Its plan is to give the computing behemoth's customers a tool to manage their security posture by looking at their infrastructure from a threat actor's point-of-view – a position IBM hopes will allow users to identify unseen weaknesses.

    IBM intends to integrate Randori's software with its QRadar extended detection and response (XDR) capabilities to provide real-time attack surface insights for tasks including threat hunting and incident response. That approach will reduce the quantity of manual work needed for monitoring new applications and to quickly address emerging threats, according to IBM.

    Continue reading

Biting the hand that feeds IT © 1998–2022