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Open Source Propels Hyperscale Data Center Growth

Driven by the requirement for more flexible and cost-effective data center infrastructure models, the combined market for cloud hardware and software components will grow at a 12 percent CAGR through 2019 to reach $38.3 billion, according to the latest market study by Technology Business Research (TBR).

“Vendors are seeding the cloud components market with both product portfolio and go-to-market enhancements that will drive opportunity growth,” said Allan Krans, principal analyst at TBR.

According to the TBR assessment, the participants in this market are enabling more service providers to embrace cloud delivery through enhanced management platforms, a growing number of managed service capabilities and open source software standards such as OpenStack.

Revenue opportunities for server, storage and data center networking hardware are robust, accounting for more than two-thirds of cloud computing components revenue in 2014.

Moreover, they will continue to rise as a percentage of revenue through 2019, driven by the emerging open source hardware and software movement, according to the TBR current estimates.

Besides, Google, Amazon and other very large cloud service providers are buying vast amounts of custom-designed hyperscale data center hardware to keep pace with growing demand for their public cloud services globally.

This trend has given way to the rapid growth of  the Original Design Manufacturer (ODM) market in the Asia-Pacific region, but the legacy Original Equipment Manufacturer (OEM) players are beginning to slow their progress by launching their own hyperscale and high-performance computing server offerings.

TBR believes that these OEMs will also capture growth opportunities from slower but more steadily growing demand for private cloud data center build-outs, with dedicated reference architectures and converged systems.

Demand for cloud computing hardware is forecast to remain strong through 2019, but integrating, managing and securing these environments is creating challenges for the vendor's customers.

As a result, TBR estimates operations management and security software will post a CAGR of 15.1 percent from 2014 to 2019, reaching nearly $5.2 billion.

Investment in capabilities such as DevOps automation, integrated management and more advanced data encryption that eases hybrid cloud computing complexity and data risk now represent the leading opportunities for new growth.

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