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Sep 27 2018

IDC Finds HCI System Sales Grow 78.1% Year-over-Year in Q2/2018

Analysts at trusted market research firm International Data Corporation (IDC) have published the latest results of their Worldwide Quarterly Converged Systems Tracker, covering the period between April and June 2018, with the central finding being that the overall market revenue grew by 9.9% compared to the same time span last year, to a total of US-$3.5 billion, The Q2 results basically underscore a wider trend that has shaped the infrastructure market for quite a while.

While market development in general went in an upward direction, this doesn't apply to each of the three segments IDC includes in its analysis: hyper-converged systems, integrated platforms, and certified reference systems & integrated infrastructure. In fact, two of those segments suffered from substantial declines; but these were offset by a nearly unfettered expansion in the third, as detailed below:

  • Revenue from hyper-converged systems sales grew 78.1% year over year during the second quarter of 2018, generating $1.5 billion worth of sales. This amounted to 41.2% of the total converged systems market.
  • Integrated platforms sales declined 12.5% year over year during the second quarter, generating revenues of $729.4 million. This amounted to 20.7% of the total converged systems market revenue.
  • The certified reference systems & integrated infrastructure market generated $1.3 billion in revenue during the second quarter, which was a year-over-year decline of 13.9% and represented 38.1% of total converged systems revenue.

As per usual, this latest edition of IDC's Tracker also lists the companies with the largest market shares. For integrated systems and certified reference systems/integrated infrastructure, that's a relative straightforward process – analysts can draw their conclusions based on a number of sources such as financial reports, import records, vendor interviews etc. However, things are a little more complicated regarding the hyper-converged systems market, as IDC uses two different methods to rank technology suppliers within this segment; more specifically, the researchers either go by the brand of the hyper-converged solution or by the owner of the software providing the necessary core capabilities. Depending on which perspective they choose, they may come up with different results. What's more, IDC's methodology also leaves room for statistical ties, meaning that vendors will be placed in the same position if the difference in their respective revenue shares amounts to 1% or less. In other words, it's entirely normal to see that five or more companies have occupied the three top spots in this particular market segment. But let's look at the simpler-to-understand rankings first:

  • The integrated platforms market was dominated by Oracle, who generated revenues of $440.6 million, which accounted for a 60.4% market share.
  • The certified reference systems & integrated infrastructure segment was led by Dell with total revenues of $639.8 million and a 47.5% market share. Cisco/NetApp arrived in second place with sales of $481 million and 35.7% market share. HPE came in a very distant third, with revenue stuck at $108.4 million and a market share of just 8.1%.

Now for the complicated part – here, we will simply quote from IDC's official statement:

"As it relates to the branded view of the hyperconverged systems market, Dell Inc. was the largest supplier with $418.7 million in revenue and a 28.8% share. Nutanix generated $275.3 million in branded revenue with the second largest share of 18.9%. Cisco and HPE were statistically tied for the quarter, with $77.7 million and $72.0 million in revenue, or 5.3% and 4.9% in market share, respectively."

The researchers then go on to say that "[f]rom the software ownership view of the market, systems running Nutanix's hyperconverged software represented $497.7 million in total second quarter vendor revenue, or 34.2% of the total market. Systems running VMware's hyperconverged software represented $495.8 million in second quarter vendor revenue, or 34.1% of the total market. Both amounts represent all software and hardware revenue, regardless of how it was ultimately branded." Following the parameters described above, Nutanix and VMware (and by extension Dell EMC) are sharing the top spot in this view.

Either way, it seems safe to say that regardless of the view you subscribe to, Dell (including its subsidies) and Nutanix emerge as undisputed market leaders.

For more details and background info, see Dave Raffo's column at TechTarget. He also provides a historically consistent analysis of IDC's tracker data on converged systems.


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