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Here's How Dell-EMC Would Have Stacked Up In The Cloud Infrastructure Race As A Single Entity In Q2

Combined sales for the two companies in the quarter before their merger closed show a tech giant among the leaders in all three cloud infrastructure categories.

Dell's acquisition of EMC has positioned the newly combined companies, now known as Dell Technologies, among the leaders on all major fronts for supplying technology to build cloud systems, according to a report released Tuesday by Synergy Research Group.

Synergy's compilation of Q2 financial disclosures reveals that had Dell and EMC been tabulated together in the quarter, the combined entity would have been nipping on the heels of the two dominant players in cloud hardware.

Dell Technologies, the company formed last week after the $65 billion acquisition officially closed, is also a cloud software powerhouse through its majority stake in VMware, the second largest supplier of infrastructure software to cloud builders.

[Related: Behind The Numbers: Synergy Research Breaks Down $110B Cloud Market]

Dell's post-merger prominence in supplying cloud infrastructure is especially significant considering stagnant data center spending, which has averaged about $29 billion for the last nine quarters, according to Synergy.

"This is a vitally important battleground for vendors as the huge market continues to be driven by aggressive adoption of both public and private clouds," said John Dinsdale, Synergy's research director.

The market for vendors of servers, operating systems, storage, networking, network security and virtualization software increasingly depends on sales to cloud providers, the only data center category for which spending is rising. And an increasingly larger share of that spending is coming from the hyperscale operators, a trend that will continue for some time, according to Jeremy Duke, Synergy's founder and chief analyst.

The cloud hardware market has long featured a tight, and exclusive, horse race between Cisco and Hewlett Packard Enterprise.

Cisco and HPE have long offered a one-two punch on the public and private cloud sides of the market. In the second quarter of 2016, counting all cloud hardware sales—both for public and private installations—HPE led the field with 15 percent market share, a tick above Cisco's 14 percent.

Combined sales from both Dell and EMC in the quarter before their deal closed added up to 13 percent share for the joint entity for public and private cloud technology sales.

Cisco had roughly 15 percent share of Q2 sales to public cloud operators with HPE closer to 11 and Dell Technologies just under 10.


But on the private cloud side, Dell Technologies represented 18 percent share in Q2, behind only HPE with its 23 percent of that market. Cisco, finding itself in an unfamiliar third place, trailed the combined Dell and EMC by about a percentage point.

When Synergy compiled the numbers several months ago for the first quarter of the year, tabulating Dell independent of EMC, Dell had placed a distant third behind Cisco and HPE in both public and private cloud categories.

On the software side of cloud infrastructure, Microsoft maintained a big lead in Q2 with more than 40 percent market share. VMware, 80 percent owned by EMC, was the closest challenger with 20 percent share.

The immediate leap in share across a number of markets following the deal was expected by Dell and its partner community, and the newly merged company is now positioned to vie for further gains in those categories, said Stephen Monteros, vice president of sales at Sigmanet, a Dell partner based in Ontario, Calif.

"If they tried to do this organically it was not going to work," Monteros told CRN. "The trick now is to first secure this position and then grow it."

Other major cloud infrastructure vendors in the quarter included IBM, Lenovo, Huawei, Oracle and NetApp, according to Synergy Research.

While the growth rate for cloud infrastructure across all categories declined slightly in the quarter, on a rolling annualized basis the market demonstrated 16 percent growth, Synergy noted.

William Bell, vice president of products at phoenixNAP, an IT services provider based in Phoenix, Ariz. that implements Dell and EMC hardware and VMware virtualization in its data centers, told CRN that his company is seeing more customers looking beyond public cloud providers to create hybrid environments.

Dell, EMC and VMware together as a unified company can continue to gain share in the market by delivering integrated private cloud offerings to customers that remain committed to on-premise components in their deployments.

"With Dell-VMware’s position in hardware, storage and the virtualization market, we feel that they are best positioned to take the traditional business workloads that have been sitting on the sidelines," Bell told CRN.

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