Hewlett Packard Enterprise Co. and Cisco Systems Inc. have led the field in the strategically important cloud infrastructure equipment market for years, but now they face new challengers for dominance in Dell EMC and makers of unbranded gear.

Synergy Research Group, which tracks the market, released data on Monday that shows HPE narrowly maintained its lead over old rival Cisco Systems at the end of the third quarter. However, with the historic merger of Dell Inc. and EMC Corp. now complete, the new entity Dell EMC has surged into third place with a market share of just over 11 percent, putting it within touching distance of the top two. Also rallying are original design manufacturers, or ODMs, which represent numerous manufacturers of unbranded cloud infrastructure gear. They now claim about 11 percent of the market between them.

The reason for Dell EMC’s surge is obvious: Both companies were heavily invested in the cloud infrastructure market pre-merger, ranking fourth and fifth overall. As for the ODMs, their surge can be explained by continued heavy investments in data centers by hyperscale cloud providers such as Amazon Web Services and Google, Synergy Group said. Microsoft Corp. and IBM Corp. round out the group of top vendors.

Digging into Synergy’s data a bit, HPE has a clear lead when it comes to private cloud infrastructure, while Cisco Systems is top dog in the public cloud infrastructure market.

As for the market overall, there’s good reason for optimism, Synergy said. The firm expects total cloud infrastructure equipment revenues for both public and private clouds, hardware and software to reach $70 billion by the end of this year, which would represent double-digit growth over the year before. The research firm said that servers, operating systems, storage, networking and virtualization software accounted for 94 percent of the market in the third quarter, with cloud security and cloud management tools making up the rest.

“Growth in private cloud infrastructure is slowing down as enterprises shift more attention and workloads to the public cloud, but that means that there is a continued boom in shipments of infrastructure gear to public cloud providers,” said John Dinsdale, Synergy’s chief analyst and research director. “For traditional IT infrastructure vendors, there is one fly in the ointment, though: Hyperscale cloud providers account for an ever-increasing share of data center gear, and many of them are on a continued drive to deploy own-designed servers, storage and networking equipment, manufactured for them by ODMs. ODMs in aggregate now control a large and growing share of public cloud infrastructure shipments.”

Source: Synergy Group Research

Still, Synergy says things are looking very good for HPE, which maintains a clear lead in the cloud server segment. The company is also the main challenger in storage, which is now led by Dell EMC. Cisco, not surprisingly, rules the roost in networking, while it also showed very strong growth in the server segment.

Microsoft’s appearance in the overall ranking stems from its strength in the server operating system and virtualization segments, while IBM’s strength is spread across a number of cloud technology segments, Synergy said.

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