Cisco overtakes HP in data center market

The global data center infrastructure hit US$26.2 billion in the third quarter of 2011, with Cisco Systems overtaking HP on aggregated revenue to take pole position, according to Canalys.

In a report released Wednesday, the research firm said worldwide data center infrastructure market grew 2.7 percent from US$25.5 billion in second-quarter 2011. Data center virtualization and consolidation, as part of efforts to migrate to private cloud, data center refresh and optimization project helped drive overall growth.

Industry standard servers remained the biggest part of the market in the third quarter, accounting for 39 percent of total investment, followed by storage at 25 percent, and Ethernet networking at 21 percent, Canalys said.

On an annual basis, industry standard server revenue increased by about 9 percent, but the strongest growth was in server virtualization which rose by approximately 30 percent.

Delving into vendor analysis, in the third quarter, Canalys said Cisco overtook HP to take pole position in the data center infrastructure market, followed by IBM in third position, Dell in fourth and EMC in fifth. In the x86 blade server market segment, Cisco is currently third but is expected to be second to HP by the end of 2012, the research firm predicted.

Data center networking and security, including switches, routers, network security, storage networking and application delivery networking, grew sequentially in the third quarter. This had boosted Cisco's position in the overall market, Canalys said. Moving forward, growth in all types of data creation including video, sensor information, social media and transactional data as well as the increasing need to store, protect, archive and access this data, will continue to drive investment in storage within data centers.

"Following its restructuring earlier in the year as part of its strategy to focus on core activities and streamline operations, Cisco reported a strong improvement, especially in its switching business, while its growth in blade servers remained robust," said Matthew Ball, Canalys' director of enterprise services. "After a challenging last three quarters, Cisco's lead in network security and improving performance in switches, storage networking and application delivery networking, as well as its performance in blade servers, propelled it ahead of HP." 

However, HP is expected to fight for the top place in the aggregated data center infrastructure market as it continues its expansion into networking storage, especially since the technology giant is building on its acquisitions of 3Com and 3Par, while establishing a converged channel to sell servers, storage and networking, Canalys said.

Ball added that HP's recognization of its security activities, including TippingPoint, ArcSight and Fortify, into a single dedicated busines unit with centralized go-to-market and marketing processes, would aid its network security revenue.

While North America remained the largest market in the third quarter, accounting for 42 percent of data center infrastructure investment, emerging markets in Asia-Pacific and Latin America experienced the fastest growth rates, according to Canalys.