Cloud Adoption Rises, Server Sales Flat
While global server shipments remained roughly flat during the second quarter, cloud services are expected to billow this year on the strength of growing infrastructure and application software services.
Market tracker Gartner Inc. (NYSE: IT) forecast this week that public cloud services would grow 17.2 percent this year to more than $208 billion. Cloud infrastructure-as-a-service offerings lead the way with annual growth projected to top 42 percent this year. Meanwhile, application software services are expected to grow 21.7 percent to nearly $39 billion as emerging micro-services technologies like applications containers begin handling production workloads.
As cloud adoption grows, the global server market continues to stagnate, Gartner said, with quarterly revenues declining 0.8 percent despite a 2 percent increase in shipments year-on-year. Dell shipped the most servers in the second quarter (more than 529,000) while Hewlett Packard Enterprise (NYSE: HPE) maintained its lead in revenues despite a 6.4 percent decline compared with the same quarter last year.
HPE's server market share was pegged at 23.7 percent, followed by Dell at 19.1 percent and IBM (NYSE: IBM) at about 9 percent of the global market. Gartner said only the Asian and North American server markers showed gains during second quarter.
"Variations of growth by datacenter segments and exchange rate issues are the main reasons for these results," Gartner said.
Meanwhile, the shift from bare metal to cloud services continues, with Gartner estimating that early adopters are saving upwards of 14 percent of their IT budgets by moving to public cloud offerings. Nevertheless, Gartner said large pent up demand remains. "Even with the high rate of predicted growth, a large number of organizations still have no current plans to use cloud services," noted Gartner's Sig Nag.
While hybrid cloud deployments continue to dominate, the market researcher stressed that companies it surveyed remained concerned about integration issues, application incompatibility along with a lack of development tools and common APIs.
With cloud vendor support also lingering as an issue, Gartner forecasts that cloud adoption will continue to favor public cloud providers with a "hybrid twist" designed to maintain maximum flexibility.
"We know that public cloud services will continue to grow. We also know that private cloud services of various types will become more widely used," added Gartner's Ed Anderson. "Therefore, providers must focus on the top hybrid cloud challenges to be successful in meeting the growing demand for hybrid cloud solutions."
While flexibility, cost savings and IT modernization continue to drive public cloud adoption, Gartner noted that security and privacy concerns linger. Noting the "hype" over cloud security, Anderson added, "The real security challenge is using public cloud services in a secure manner."
While public could adoption is expected to steadily increase, private and hosted private cloud services also will rise through 2017. That will create more multi-cloud platforms requiring greater coordination using "hybrid scenarios," Gartner said.
