Cisco overtakes HP in data center infrastructure market

by CXOtoday staff    Dec 14, 2011

Cisco overtook HP in the data center infrastructure market in Q3 2011, in terms of aggregated revenue, followed by IBM, Dell and EMC, as per the findings of research firm Canalys.

Data center networking and security, including switches, routers, network security, storage networking and application delivery networking, grew on a sequential basis in Q3, which boosted Cisco’s position in the overall data center infrastructure market.

Looking ahead, growth in all forms of data creation, including video, information from sensors, social media and transactional data, and the increasing need to store, protect, archive and access this data, will continue to drive investment in storage within data centers.

In the x86 blade server market the vendor is currently third but expected to be number two behind HP by the end of 2012, according to Canalys estimates.

“Following its restructuring earlier in the year as part of its strategy to focus on core activities and streamline operations, Cisco reported a strong improvement, especially in its switching business, while its growth in blade servers remained robust,” said Canalys Director of Enterprise Services Matthew Ball.

The analyst said that after a challenging last three quarters, Cisco’s lead in network security, and improving performance in switches, storage networking and application delivery networking, as well as its performance in blade servers, propelled it ahead of HP.

HP, however, is expected to challenge the top spot in the aggregated data center infrastructure market, as it continues its expansion into networking and storage, especially as it builds on its acquisitions of 3Com and 3PAR and establishes a converged channel to sell servers, storage and networking.

“HP’s reorganization of its security activities, including TippingPoint, ArcSight and Fortify, into a single dedicated business unit with centralized go-to-market and marketing processes will also help it drive its network security revenue,” said Ball.

Canalys said that the worldwide data center infrastructure market reached $26.2 billion in Q3 2011, up 2.7 percent from $25.5 billion in Q2 2011

A wave of data center virtualization and consolidation, drove overall growth as part of the migration to private clouds, as well as data center refresh and optimization projects. Industry standard servers remained the largest part of the market in Q3, accounting for 39 percent of total investment, followed by storage at 25 percent and Ethernet networking at 21 percent. Though blades increased, overall server shipments slowed compared with Q2 2011.

On an annual basis, industry standard server revenue was up approximately nine percent, but the strongest growth was in server virtualization, which increased just under 30 percent.