HPE shines in IDC Converged Systems tracker, Cisco does not

Mature-looking HCI market has Dell-VMware in lead with Nutanix second

Cisco stumbled in the hyperconverged infrastructure (HCI) section of IDC's Worldwide Quarterly Converged Systems Tracker, for 2017's final quarter as HPE did a Falcon Heavy and took off.

The worldwide converged systems market grew 9.1 per cent year-on-year (y-o-y) to $23.6bn in the fourth quarter of last year, and $12.5bn in the whole of 2017, up 9.4 per cent over 2016.

Eric Sheppard, IDC’s Research VP for enterprise servers and storage, put it down to more customers, saying: "The number of organizations deploying converged systems continued to expand through 2017.”

There are three segments; certified reference systems (think FlexPods) and integrated infrastructure (think VxBlocks), integrated platforms (think Oracle engineered systems), and hyperconverged infrastructure (HCI) systems.

The HCI area is where the excitement is, so let’s start with that.

HCI

For the first time IDC tracked branded HCI sales and also sales by the owner of the software providing the core hyper-converged capabilities. The overall numbers are the same but the supplier rankings differ considerably.

It is the second largest sector, with revenues of $1.25bn in the quarter, up 69.4 per cent on the year and 25 per cent higher than the third quarter’s $1bn total.

Here is IDC’s branded HCI revenues table (revenues in $millions):

Company 4Q17 Revenue 4Q17 Market Share 4Q16 Revenue 4Q16 Market Share 4Q17/4Q16 Revenue Growth
1. Dell $346.8 27.8% $145.9 19.8% 137.7%
2. Nutanix $243.0 19.5% $161.4 21.9% 50.6%
T3. HPE $61.6 4.9% $14.0 1.9% 340.4%
T3. Cisco $56.3 4.5% $18.8 2.5% 199.7%
All Others $541.0 43.3% $397.1 53.9% 36.2%
Total $1,248.6 100% $737.1 100% 69.4%

The rankings are pretty much the same as in the third quarter, except that Cisco and HPE have exchanged places, with HPE in front, although IDC declares a tie for third place.

Dell was in front with $346.8m and Nutanix second with $243mn. Then we come to HPE and Cisco in a tie for third place.

Cisco’s revenues actually declined quarter-on-quarter. In the third quarter they were $65.7m while amounting to $56.3m in the fourth quarter. So the HCI market grew 25 per cent q-on-q but Cisco’s HCI sales decreased 14.3 per cent as something took the spring out of its step; oops.

HPE’s third quarter revenues were $35.6m; they were $61.6m this quarter, meaning a 73 per cent jump; eat your heart out Cisco.

Looking at HCI revenues by the core SW owner, VMware leads the pack with Nutanix a fairly close second. It led VMware in the year-ago quarter. Study this IDC table (revenues in $millions) to see it:

Company 4Q17 Revenue 4Q17 Market Share 4Q16 Revenue 4Q16 Market Share 4Q17/4Q16 Revenue Growth
1. VMware $405.1 32.4% $191.7 26.0% 111.4%
2. Nutanix $368.4 29.5% $231.4 31.4% 59.2%
3. Dell $96.5 7.7% $81.6 11.1% 18.2%
4. HPE $62.2 5.0% $14.1 1.9% 339.8%
All Others $316.5 25.3% $218.3 29.6% 45.0%
Total $1,248.6 100% $737.1 100% 69.4%

Clearly VMware, with $405.1m revenues, outgrew Nutanix with its $368.4m. The market sector grew 69.4 per cent overall but third-placed Dell EMC revenues of $86.5m undergrew the market at 18.2 per cent, as did Nutanix by the way, with its 59.2 per cent growth.

Now look at HPE’s 339.8 per cent annual growth to $62.2m and be impressed. Cisco is in the others category here, as is new HCI entrant NetApp. According to Aaron Rakers, a senior analyst at Wells Fargo, IDC estimated that NetApp saw about $8m in HCI revenues in the fourth 2017 quarter.

Enough with HCI; let’s turn to certified reference systems.

Certified reference systems and integrated infrastructure

The largest share of the converged systems market is this certified reference etc. one, with $1.7bn of revenue in the fourth 2017 quarter; 47.1 per cent of the total market. But it declined 3.4 per cent y-o-y, turning down from a 1.5 per cent y-o-y rise in the previous quarter.

Here are IDC's top 3 companies in worldwide certified reference systems & integrated infrastructure in the fourth quarter of 2017, with revenues in $millions:

Company 4Q17 Revenue 4Q17 Market Share 4Q16 Revenue 4Q16 Market Share 4Q17/4Q16 Revenue Growth
1. Dell $735.0 42.9% $859.4 48.4% -14.5%
2. Cisco/NetApp $565.6 33.0% $486.7 27.4% 16.2%
3. HPE $289.3 16.9% $278.6 15.7% 3.9%
All Others $124.4 7.3% $149.7 8.4% -16.9%
Total $1,714.3 100% $1,774.4 100% -3.4%

Dell led the sector with $735m in revenues, down 14.5 per cent. Second-placed NetApp and Cisco grew their revenues 16.2 per cent to $565.6m. Keep it up boys.

HPE in third place grew its share 3.9 per to $289.3m, while the Others category declined 16.9 per cent to $124.4m cent. We figure the converged systems sub-sector shrank substantially while the certified reference systems one grew fastest.

Integrated Platforms

This was a dull sector, as revenues of $675.5m declining 18.1 per cent over the year. They shrank 19.8 per cent y-o-y in the third quarter too. Once again Oracle was the lead supplier with $360.5m in revenues and a 53.4 per cent share. In the third quarter its revenues were $240.4m and it had a 45.8 per cent share.

Oracle’s share is improving while the sector shrinks, under the influence we think, of HCI invasion.

Over the entire converged systems market Dell, as it owns VMware, is unquestionably the leader. Certified reference systems are dominated by the Cisco/NetApp pairing. Nutanix is a strong second to VMware and Dell an the HCI space, where HPE’s growth rates, admittedly from a smallish base, make Cisco look a laggard.

The HCI market already looks mature, with interest being focussed away from the two leaders; Dell/VMware and Nutanix, to how long HPE can sustain its growth rates; whether Cisco will start growing again; and when or if NetApp will emerge from the Others category. ®

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