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Hosted and cloud collaboration sales surge amid flagging on-prem

Microsoft shrugs off rivals Cisco and HPE in the cloud computing competition.

By Sabrina Dougall

On-prem or off-prem? That is the million pound question for IT enterprise leaders today. Now, new research confirms a digital disruption trend set to characterise 2018: the rise of cloud computing and collaboration amid the unmistakable decline of on-premises data services. Meanwhile, investment remains steady for the biggest IT budget items: data centre servers, and switches/routers.

Overall, annual enterprise IT spending grew by 3% last year compared with 2016 to reach $113 billion. Unsurprisingly, data centres remain top of the spend agenda, though investment here declined 1% in 2017. This central service amounts to a worldwide market of more than $30bn.

By contrast, the second greatest segment, switchers and routers, saw a boost of 4% in 2017. Uptake of these key technologies remains sturdy, with a worldwide market pushing $30bn.

Cisco remains head of the enterprise vendor leaderboard, standing out as the market leader in four of the six main enterprise IT segments. The Silicon Valley conglomerate came in second place for market-mover hosted and cloud collaboration and trailed in fifth for data centre sales. In aggregate across the full six sectors, Cisco market share was 26%, down just slightly relative to the previous year though well over twice the size of its nearest competitor, HPE (11% market share).

The explosion of hosted and cloud collaboration shows off-site storage is going from strength to strength – with Microsoft at the helm. Though the tech giant is in fact the second largest vendor in on-premise industry, Microsoft still shrugs off rivals Cisco and HPE in the cloud computing industry.

By comparison, on-prem collaboration continued to shrink amid aggressive price wars and market disruption.

Second place vendors in other enterprise spend segments are Dell EMC (enterprise data centre servers), Huawei (switches and routers), HPE (WLAN), and Check Point (network security). Vendors who saw notably high growth rates in these fierce markets include Super Micro, Arista Networks and RingCentral.

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“Despite a burgeoning public cloud market, enterprise IT infrastructure spending was still on the rise in 2017 and will be for the next five years,” said Jeremy Duke, founder and chief analyst at Synergy Research Group, who carried out the research.

“The focus of that spending is changing, however, with a growing emphasis on hosted solutions, subscription-based business models and emerging technologies.”

The figures reflect research from Q4 2016 to Q3 2017.

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