New Q1 data from Synergy Research Group shows that public cloud provider spending on infrastructure hardware and software continues to surge, growing 32% from the first quarter of 2017 after an unusually strong start to the year. This is the highest growth figure seen in nine quarters, during which year-on-year growth has typically been in the 10% to 20% range. The first quarter usually sees a sharp drop off after a seasonally strong fourth quarter, but first quarter spending was down just 2% from Q4. In terms of vendor market share, ODMs in aggregate continue to run away with the market and now account for almost 30% of total revenues. They are followed by Dell EMC, Cisco, and HPE, each with a 5% to 10% market share. The next highest ranked vendors in Q1 were Microsoft, Huawei, and VMware.

Total public cloud infrastructure revenues, including hardware and software, passed the $10 billion per quarter milestone in Q3 of last year and are now comfortably over $11 billion. Servers, OS, storage, networking, and virtualization software combined accounted for 95% of the Q1 public cloud infrastructure market, with the balance comprising cloud security and cloud management. By segment, ODMs dominate server and storage hardware shipments, followed at a distance by Dell EMC, HPE and Cisco. Cisco has a clear lead in networking, despite the continued strong growth of Arista. Microsoft and VMware are leaders in the infrastructure software segments.

“As we saw in our analysis of Q1 hyperscale capex, the hyperscale operators are on a spending spree and continue to crank up their investment in data centers, with much of this spending flowing through to the vendors of data center hardware and software,” said John Dinsdale, a chief analyst and research director at Synergy Research Group. “Hyperscale operators totally dominate the cloud market, so their ongoing growth bodes well for hardware and software vendors – though ODMs continue to aggressively increase their share of the pie. Our forecasts show that IaaS, PaaS, SaaS, and public cloud workloads generally are all going to continue to grow rapidly over the next five years, which will continue to drive ever-increasing levels of spending on data center infrastructure.”