Report confirms on-premises data center spending declined

Just a month ago we had research that indicated on-premises data center investments were dropping in priority as companies moved to the cloud. Now a second report confirms this suspicion that companies are de-emphasizing their on-premises data centers in favor of the cloud.

The numbers come from Synergy Research, which show that spending on traditional, non-cloud data center hardware and software dropped 18 percent between the second quarters of 2015 and 2017. During that same period, public cloud spending grew 35 percent. The overall market for data center equipment grew by 5 percent to a total of more than $30 billion. 

“With cloud service revenues continuing to grow by over 40 percent per year, enterprise SaaS revenue growing by over 30 percent, and search/social networking revenues growing by over 20 percent, it is little wonder that this is all pulling through continued strong growth in spending on public cloud infrastructure,” said John Dinsdale, chief analyst and research director for Synergy Research Group, in a statement. 

Synergy Research

While the on-premises business continues to shrink, three vendors — Cisco, Hewlett Packard Enterprise and Dell EMC — are fighting it out for the public cloud infrastructure market, according to the survey. In the public cloud market, Cisco is the dominant vendor, not surprising given its emphasis on networking equipment. In private cloud, Dell EMC is the dominant vendor, followed by HPE and Microsoft.

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