The three pillars of tech infrastructure - servers, storage and networking - are selling like lukewarm cakes as sectoral heat dissipates.
Hardware sales for the three categories combined grew at 4.8 per cent to $38.8bn in Q1, up $1.8bn year-on-year but a marked slowdown on the 16.3 per cent rate of rise for 2018, stats compiled by Canalys show.
Lower capital expenditure from hyperscale cloud builders, continued crappy spending from service providers, the end of the latest mainframe refresh cycle and fewer server and storage systems bought by enterprises were all blamed.
Matthew Ball, principal analyst at Canalys, said:
"Vendors have become accustomed to high double-digit percentage growth rates over the last 18 months, fuelled by rising average sales prices, due to server refresh, component price rises and demand for higher configurations to support more compute intensive workloads."
This trend was not "sustainable" and is now "cooling", but while a "wider server refresh is still ongoing in businesses", more focus is being placed on "integrating multi-cloud services with existing on-premises resources as part of hybrid cloud strategies and simplifying operations".
The steepest slowdown was seen in the server segment: shipments grew 3.7 per cent to $18.94bn. Hyperscalers have turned to consuming capacity following their big cash splurges in 2018.
Storage grew 4.6 per cent to $7.6bn with all-flash arrays and hyperconverged infrastructure driving the uptick.
Networking was the only area of the three in Q1 to grow quicker than it had in the same period of 2018, up 6.5 per cent to $12.26bn. The replacement of campus networks, SD WAN and the shift to Wi-Fi 6 played out well for vendors. Data centre switching was flat.
Cisco, Dell EMC and HPE accounted for 52.1 per cent of infrastructure sales, up from 50.5 per cent. The fourth largest? Er, Huawei. Though whether that is the case in a year's time appears very doubtful at this point, ahead of the US Executive Order coming into effect in August.
For the full year, Canalys is projecting infrastructure shipments to grow 6.4 per cent, one caveat being the trade tariff situation between the US and China.
"The longer the US-China trade war goes on, the more of an impact it will have on economies and business investment," said Ball. "Confidence is starting to decline around the world, with central banks prepared to inject stimulus measures if the situation worsens."
The Reg has written extensively about the impact of the tariffs on the supply chain and some vendors are already migrating manufacturing to other lower cost locations or at the very least considering their options to put more emphasis on other manufacturing sites. If this trend continues, the Philippines, Mexico, Vietnam, India and part of Eastern Europe should be the beneficiaries. ®