New Q3 data from Synergy Research Group shows that HPE, Cisco, and Microsoft continue to lead in the three main data center infrastructure market segments — enterprise data center hardware, service provider data center hardware, and data center software respectively. Enterprise hardware accounts for over half of the market and in Q3 HPE extended its lead and grew its market share to 24%. For HPE this continues a trend of gradually growing its share of the enterprise hardware market. Service provider data center hardware is a much smaller market than enterprise, but it is growing very strongly in contrast to the relatively flat enterprise market. Cisco continues to lead in service provider hardware thanks to its dominance of data center networking and its rapidly growing server business. Data center software is the smallest of the three segments and it is totally dominated by Microsoft, with VMware being the only other vendor with substantive market share.

Total Q3 spend on data center infrastructure grew by 3% year on year to reach $29 billion, with most of the growth coming from service provider hardware which grew by over 20%. Data center infrastructure includes servers, server OS, storage, networking, network security and virtualization software. Among the individual product segments some of the highest growth was seen in virtualization software, blade servers and integrated security platforms. The largest single product segment is rack servers which account for 34% of the total market.

“Data centers are the foundation of cloud services and this has driven annual spending on data center networking, compute and storage toward the $120 billion mark,” said Jeremy Duke, Synergy Research Group’s founder and chief analyst. “The mass adoption of public cloud services has created the need for widespread deployment of hyperscale data centers and has led to record spending on service provider data center equipment. While the market dynamics are different for private cloud, it too will drive enormous changes in the investment patterns for enterprise data center hardware, software, and services.”