Introducing the Hardware and Communications Equipment Industry

(Continued from Prior Part)

What is a data center, and who’s leading this segment?

A data center is a facility used to house computer systems and other associated components, including telecommunications and storage systems. It’s a centralized repository—either physical or virtual—primarily used for the storage, management, and dissemination of data and information.

According to a research report from Synergy Research Group, Hewlett Packard Enterprise (HPE), Cisco Systems (CSCO), and Microsoft (MSFT) continue to hold respective leads in the following three main data center infrastructure business segments:

• enterprise data center hardware

• service provider data center hardware

• data center software

Enterprise hardware, service provider data center hardware, data center software

Enterprise hardware accounts for over 50% of the data center market. In 3Q15, HPE continued to lead this market and grew its share to 24%. Service provider data center hardware, however, is a smaller market but is expected to grow at a faster rate than the enterprise market. Cisco continues to remain a market leader in the service provider hardware business, driven by its dominance of data center networking and the rapidly growing server business.

The data center software business is the smallest of the three businesses and is largely dominated by Microsoft (MSFT), which has a share of almost 70%. VMware (VMW) is another firm competing in this space and has a share of 18%. Notably, Microsoft accounts for 11% of the Technology Select Sector SPDR Fund (XLK).

In the next part, we’ll analyze the key drivers for the data center business.

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Browse this series on Market Realist:

• Part 1 - Who Are the Heavyweights in US Hardware and Communications Equipment?

• Part 2 - How Companies like Cisco Plan to Leverage their Integrated Solutions Market Growth

• Part 3 - What Are the Market Transitions Impacting Hardware Firms?