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White label infrastructure makers eat into tech giants’ public cloud market share

White label infrastructure makers eat into tech giants’ public cloud market share

ODMs now account for almost 30 per cent of total revenues in terms of public cloud infrastructure vendor market share

Use of original design manufacturers’ (ODMs) hardware and software by public cloud providers continues to grow, effectively eating into the market share of name brands such as Dell EMC and Hewlett Packard Enterprise (HPE).

According to new data by industry analyst firm Synergy Research Group, as at the end of the three months ending March, ODMs account for almost 30 per cent of total revenues, in terms of public cloud infrastructure vendor market share.

As a collective, ODMs, which typically design and manufacture a product that is eventually rebranded by another firm for sale, are followed by Dell EMC, Cisco and HPE, each with between five and 10 per cent market share.

According to Synergy Research, the next highest ranked vendors in the quarter ending March were Microsoft, Huawei and VMware.

The rise of ODMs – effectively white label sellers – in the public cloud infrastructure market comes as total global quarterly public cloud infrastructure sales revenues, including hardware and software, reaches beyond US$11 billion, well up from the US$10 billion per quarter milestone it hit in the third quarter last year.

First quarter data from Synergy Research Group showed that public cloud provider spending on infrastructure hardware and software continued to surge in the three months ending March, growing 32 per cent from the first quarter of 2017, after an unusually strong start to the year.

Indeed, the first quarter of the year represents the highest growth figure seen by the industry in nine quarters, during which growth has typically been between 10 and 20 per cent.

According to Synergy Research, the first quarter of the year usually sees a sharp drop off after a seasonally strong fourth quarter, but in the first quarter of this year, spending was down just two per cent from last year’s Q4.

Together, servers, operating systems, storage, networking and virtualisation software accounted for 95 per cent of the Q1 public cloud infrastructure market, with the rest made up of cloud security and cloud management.

Synergy Research’s data showed that, by segment, ODMs dominate server and storage hardware shipments, followed at a distance by Dell EMC, HPE and Cisco.

That said, Cisco appears to have a clear lead in the networking space, despite strong growth of Arista. At the same time, Microsoft and VMware were leaders in the infrastructure software segments.

“Hyper-scale operators totally dominate the cloud market, so their ongoing growth bodes well for hardware and software vendors – though ODMs continue to aggressively increase their share of the pie,” Synergy Research chief analyst and research director John Dinsdale said.

In May, Synergy Research revealed that global hyper-scale cloud vendors collectively forked out at least US$27 billion in capital expenditure (capex) over the three months ending March, an 80 per cent year-on-year increase.


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