Vendors shipped nearly 35 percent more converged infrastructure in the third quarter than the same period last year but saw total worldwide revenue increase by less than a fifth of that, according to a new estimate from International Data Corporation (IDC). The research firm believes that the discrepancy reflects a shift in spending from the expensive hardware bundles that have historically dominated the market to smaller and more affordable all-in-one appliances based on commodity gear, which are starting to reshape the competitive balance of power.

While still the smallest of the three product categories IDC surveyed as part of the study, the hyperconvereged segment witnessed the most growth by far in the third quarter, with worldwide sales rising a massive 155.5 percent from 12 months ago to $278.8 million. The upswing puts all-in-one appliances on track to soon overtake certified reference systems, which came out at the middle of the pack last quarter with $680 million in revenue, or 26.8 percent of the global market. That’s impressive on the surface but represents a barely noticeable improvement of 0.31 percent over 2014 according to the research firm, not an encouraging figure by any means.

Yet the segment still fared better than the vanilla integrated systems that currently dominate the industry, which saw their slice of the pie shrink 1.42 percent to $1.59 billion. The findings explain the recent efforts of the top supplier in the category, EMC Corp. and VMware Inc. joint venture VCE, to move into the hyperconvergence space with new rack models. While the rivaling all-in-one systems of startups such as Nutanix Inc. and SimpliVity Inc. are growing at an alarming rate, the outfit has plenty of time to reposition thanks to its sizable head start. 

VCE’s overwhelming 62.3 market share in its home segment amounted to $482.86 million in the third quarter, nearly twice the amount generated by the entire hyperconverged segment. Overall, IDC estimates that vendors shipped $2.5 billion worth of equipment in the three-month period, which represents a healthy 6.2 percent increase from last year that is only set to widen over time as organizations continue to buy more and more of their hardware in integrated boxes.

Image via IDC