Virtualisation continues to eat datacentre hardware firms’ lunch

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6a235b1f887b8a62a98dcd56b014a2a3Datacentre hardware vendors continue to feel the bite of virtualisation on profits.

According to the latest benchmark report from Technology Business Research, revenue for datacentre hardware vendors fell 4.3% year on year in the second quarter, with growth profit dipping 5.4% as a result.

The research firm suggested that the trend meant traditional hardware vendors may have to pivot their business models.

“Increasing pressure from lines of business to move with greater agility and productivity, coupled with the maturity of new architectures such as hyperconverged platforms, is significantly disrupting the datacentre market,” said TBR Data Center Senior Analyst Krista Macomber.

At a quickening pace, customers are embracing software-defined functionality and service-based delivery for business-critical workloads and datacentre consolidation initiatives. For mainstream hardware vendors, this shift necessitates business model evolutions that are equally as radical to remain relevant.”

The report suggests the shift towards industry standard servers rather than proprietary kit continues apace. Meanwhile the switches and routers segment is facing early commoditisation, according to TBR.

“Dell’s acquisition of EMC, Hewlett Packard Enterprise’s plans to reduce emphasis on noncore  capabilities, and Brocade’s purchase of Ruckus Wireless all point to a shifting datacentre environment  that requires vendors to compete  not only comprehensively but also with a stronger focus on customers’ evolving infrastructure level pain points,” said TBR analyst Stephanie Long.

“Shrinking opportunities to differentiate on hardware and consolidation of the vendor landscape will result in a highly competitive market for the foreseeable future.”

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