Dell EMC led the hardware segment of the hyper-converged infrastructure (HCI) market with 32 percent market share during the third quarter of 2018, according to IHS Markit’s most recent Data Center Server Equipment Market Tracker.
Dell EMC — whose HCI servers use software from VMware and Nutanix — finished ahead of Hewlett Packard Enterprise (HPE), which came in second at 25 percent (using its own software). Huawei, Cisco, and Supermicro all held between 8 percent and 9 percent market share. Though it is exiting the hardware sector, Nutanix finished at 5 percent. Lenovo and the white box vendors came in at about 5 percent as well.
Nutanix and VMware led the software sector, though IHS Markit doesn’t provide percentages. This echoes a recent market share report by IDC that also named Nutanix and VMware as the leading HCI software vendors.
IHS Markit’s Data Center Server Equipment Tracker, released last week, found that HCI is growing quickly. From a starting point of only 122,000 units last year, the category will push the sector past 1 million units shipped by 2022. The compound annual growth rate (CAGR) will be 70 percent during the period.
The demand is coming from the edge, where big data and other sophisticated tasks increasingly are performed but where power and space often are limited. HCI addresses the squeeze by combining computer, network, and storage with an integrated software stack that provides orchestration and virtualization of these elements.
IHS Markit’s latest Data Center Compute Strategies and Leadership survey gauged demand from 154 organizations in North America that have more than 100 employees. The CAGR to some extent is a function of the category is young. What is more telling is that organizations surveyed plan to grow HCI-based server penetration from an average of 18 percent now to 25 percent by next year.
“What is interesting about the HCI category is not just the growth rate but the purchase intent enterprises voiced in the survey we ran,” Vladimir Galabov, principal analyst for IHS Markit’s cloud and data center research practice, told SDxCentral.
Smaller Enterprises Use HCI More
Precisely who is deploying also is interesting. Smaller organizations are using HCI more than larger ones. The survey found that 24 percent of servers at organizations with fewer than 1,000 employees used HCI in 2018, while 17 percent of servers at organizations with more than 1,000 employees were configured in this way. “Overall, I expect that HCI demand is strong both at small and medium-sized enterprises,” Galabov wrote in an email.
It is a volatile sector at this point. “This is a comparatively new market, so a large order can create a market leader/loser for a short period of time,” Galabov wrote. “In that sense the leader board can be volatile. What we’ve seen is multiple new entrants challenging the leaders HPE and Dell in 2019. We also saw Nutanix focus on HCI software only, exiting the hardware market and partnering with other vendors. In 2019 I expect Lenovo and Inspur to have a bigger focus on HCI. Both of them are partnering with HCI software vendors – the former with Pivot3 and Scale Computing, the latter with Nutanix.”
It’s clear that it will be a long time before HCI is commoditized. “HCI differentiation comes from the software stack providing orchestration and virtualization of compute, storage and network,” Galabov wrote. “Vendors are using different virtualization and orchestration techniques as they see this as a central differentiation.”
An issue going forward, not surprisingly, is cost. A second and more recent issue is ease of service. The category has evolved and one-vendor HCI servers have been joined by devices featuring discrete hardware and software vendors. This could be an issue, especially if the focus remains on smaller organizations that generally lack on-site expertise and other technical resources. “With the formation of HCI software and HCI hardware vendors, it will be important for the support level to not deteriorate,” Galabov wrote. “In other words, the partnerships of HCI software and hardware vendors need to be seamless.”―SDxCentral