Over the last four quarters, spending on data center infrastructure reached $114 billion, with software now accounting for 23 percent of the total, according to a report from Synergy Research Group.
Two major vendors, Microsoft and VMware, currently dominate the software segments of the market, in aggregate accounting for almost 90 percent of software revenues.
John Dinsdale, managing director and chief analyst for Synergy, told eWEEK that Microsoft and VMware’s dominant market position is the old story of being first into a fledgling market, continuing to focus on it and building a dominant position that cannot be seriously challenged by other vendors, even as the market goes through a strong growth period.
"Microsoft pretty much owns the server OS market, with the only real competition coming from free or virtually free Linux implementations," he said. "VMware doesn’t quite have the same level of dominance in the virtualization applications market, but still manages to control [the majority] of the market. Microsoft is its only major challenger, with Oracle, IBM, Red Hat, Citrix, and others having minor market shares."
Dinsdale noted cloud technology is affecting data center infrastructure in a variety of ways.
"Additional cloud applications and usage are helping to aggressively drive up the volume of computer workloads and traffic that need to be handled," he said. "Even though cloud enables big increases in efficiency, this still results in strong growth in data center infrastructure equipment volumes."
He noted one additional change is that as public cloud is being used to handle an ever increasing portion of enterprise computer workloads, there is a shift in data center spending away from enterprises themselves and toward public cloud providers and their hyperscale data centers.
This, he said, helps to drive another shift toward a greater usage of original device manufacturers (ODMs) to provide relatively low-cost hardware to the hyperscale cloud providers.
There is a considerably broader range of large vendors in the hardware side of the market, where the top four companies in aggregate account for 54 percent of revenues.
The report noted HP has a strong lead in data center hardware, followed by Cisco, Dell and IBM, with other major data center vendors include EMC, Lenovo, NetApp, Oracle, Fujitsu and Hitachi.
Total spending on data center over the four-quarter period grew by 6 percent relative to the previous four quarters, with software growing by 14 percent and hardware growing by 4 percent.
"We forecast that total spending on data center infrastructure will keep on growing over the next five years, though not by huge amounts--a compound annual growth rate of substantially less than 5 percent," Dinsdale said. "The big change is that an ever increasing portion of this spend will be accounted for by data centers supporting public and private clouds."