Hyper-converged infrastructure (HCI) shipments will grow at a 70% CAGR out to 2022, surpassing 1M units by 2022, driven by enterprise investment. HCIs are servers that include compute, network, and storage with an integrated software stack providing orchestration and virtualization of the compute, network, and storage resources. Demand for HCI at the edge is growing for workloads like analytics of IoT data, according to IHS Markit’s Data Center Server Equipment Tracker.

“HCI is well suited to the needs of enterprises as less configuration is needed when the equipment arrives, and once it’s deployed, management is easier. HCI is also attractive to small enterprises as a form of low cost storage as they won’t need to invest in costly storage arrays,” said Vladimir Galabov, principal analyst, cloud and data center research practice IHS Markit. “We’ve also seen a growing number of deployments and customer interest for HCI at the enterprise edge where a small rack with 2-4 HCI nodes is deployed at a retail store or a local office for data consolidation and real-time analytics workloads.”

Currently HPE and Dell hold majority share of worldwide HCI revenue and shipments though ramping investments from Lenovo, Cisco and Inspur, as well as, White Box Vendors is set to grow buyer awareness and provide much needed choice. In December 2018, Intel and Nutanix also announced a partnership to establish an HCI system integrator and a value-added reseller ecosystem.

Respondents to IHS Markit's latest Data Center Compute Strategies and Leadership survey of 154 North American organizations that have data centers and at least 101 employees indicated they plan to grow HCI from on average 18% of servers deployed to 25% by 2020. The survey results showed that HCI adoption is higher at smaller enterprises with under 1,000 employees. At the smaller enterprises surveyed, HCI made up 24% of servers in 2018, compared to 17% of servers at enterprises with over 1000 employees.

Additional data center server market highlights

  • 2.4% of servers in 3Q18 shipped with general purpose programmable parallel compute co-processors for AI and ML; this grows to 11.2% by CY22
  • Open compute revenue was up 11% QoQ and 54% YoY, hitting $1.4B in 3Q18
  • Density optimized blade revenue was up 16% QoQ and 112% YoY, hitting $1.9B in 3Q18
  • In 3Q18 Dell EMC maintained the #1 spot in revenue market share (20%); HPE was #2 (18%), and White Box Vendors were #3 (16%) in 3Q18
  • CSPs are expected to receive 43% of 2018 DC server units shipped; telco will receive 15% and enterprise 42%