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Friday, December 20, 2019

Converged Systems Adapt to Hybrid Multi-cloud Demand

Global demand for enterprise data center server and storage infrastructure tends to fluctuate. According to the latest market study by International Data Corporation (IDC), worldwide converged systems market revenue increased 3.5 percent year-over-year to $3.75 billion during the third quarter of 2019 (3Q19).

"The converged systems market continues to grow despite a challenging overall data center infrastructure environment," said Sebastian Lagana, research manager at IDC.

Converged Systems Market Development

In particular, hyperconverged solutions remain in demand as vendors position the solutions as an ideal framework for hybrid, multi-cloud environments due to their software-defined nature and ease of integration into premises-agnostic environments.

The IDC converged systems market view offers three segments: certified reference systems & integrated infrastructure, integrated platforms, and hyperconverged systems.


The certified reference systems & integrated infrastructure market generated $1.26 billion in revenue during the third quarter, which represents a contraction of 8.4 percent year-over-year and 33.7 percent of all converged systems revenue.

Integrated platforms sales declined 13.9 percent year-over-year in 3Q19, generating $475 million worth of sales. This amounted to 12.6 percent of the total converged systems market revenue.

Revenue from hyperconverged systems sales grew 18.7 percent year-over-year during the third quarter of 2019, generating nearly $2.02 billion worth of vendor revenue. This amounted to 53.7 percent of the total converged systems market.

As it relates to the branded view of the hyperconverged systems market, Dell Technologies was the largest supplier with $708.4 million in revenue and a 35.1 percent share. Nutanix generated $262.2 million in branded hardware revenue, representing 13 percent of the total HCI market during the quarter.

There was a 3-way tie for third place between Cisco, Hewlett Packard Enterprise, and Lenovo, generating $109 million, $91.9 million, and $91.5 million in revenue each, which represents 5.4 percent, 4.6 percent, and 4.5 percent share of the market share respectively.

Outlook for Hyperconverged Software Growth

From the software ownership view of the market, new systems running VMware hyperconverged software represented $766.2 million in total 3Q19 vendor revenue or 38 percent of the total market.

Systems running Nutanix hyperconverged software represented $549.2 million in third-quarter vendor revenue or 27.2 percent of the total market. Both amounts represent the value of all HCI hardware, HCI software, and system infrastructure software sold, regardless of how it was branded at the hardware level.

Based on the latest market data study, demand for software-defined infrastructure seems promising. However, the ongoing shift to public cloud services may impact future growth in the enterprise market. CIOs and CTOs must balance the need for developer convenience with the potential for IT cost reduction.