Worldwide Converged Systems Market Declines 4.5% Year Over Year During the Second Quarter of 2020, According to IDC

FRAMINGHAM, Mass.–(BUSINESS WIRE)–#HCI–According to the International Data Corporation (IDC) Worldwide Quarterly Converged Systems Tracker, worldwide converged systems market revenue decreased 4.5% year over year to $3.9 billion during the second quarter of 2020 (2Q20).

“The overall converged systems market showed a decline during a difficult second quarter as broader weakness in enterprise buying across server and storage also impacted HCI,” said Paul Maguranis, senior research analyst, Infrastructure Platforms and Technologies at IDC. “The certified reference systems & integrated infrastructure and integrated platforms segments both declined this quarter while the hyperconverged systems segment was able to witness modest growth despite headwinds in the market. This growth was mostly due to strong HCI performance in Asia/Pacific, especially in China and Japan.”

Converged Systems Segments

IDC’s converged systems market view offers three segments: certified reference systems & integrated infrastructure, integrated platforms, and hyperconverged systems. The certified reference systems & integrated infrastructure market generated just over $1.5 billion in revenue during the second quarter, which represents a decline of 7.6% year over year and accounts for 39.1% of all converged systems revenue. Integrated platforms revenues declined 13.1% year over year to $544 million in 2Q20. This amounted to 13.8% of the total converged systems market revenue. Revenue from hyperconverged systems sales grew 1.1% year over year during the second quarter, totaling nearly $1.9 billion. This amounted to 47.1% of the total converged systems market.

A graphic illustrating worldwide market share for the three converged systems market segments over the previous five quarters is available by viewing this press release on IDC.com.

IDC offers two ways to rank technology suppliers within the hyperconverged systems market: by the brand of the hyperconverged solution or by the owner of the software providing the core hyperconverged capabilities. Rankings based on a branded view of the market can be found in the first table of this press release and rankings based on the owner of the hyperconverged software can be found in the second table within this press release. Both tables include all the same software and hardware, summing to the same market size.

As it relates to the branded view of the hyperconverged systems market, Dell Technologies was the largest supplier with $519.6 million in revenue and a 27.9% share. Nutanix generated $253.5 million in branded hardware revenue, representing 13.6% of the total HCI market during the quarter. In third was Hewlett Packard Enterprise with $130.0 million in revenue, which represents a 7.0% share of the market.

Top 3 Companies, Worldwide Hyperconverged Systems as Branded, Q2 2020 (revenue in $M)
Company	2Q20 Revenue	2Q20 Market Share		2Q19 Revenue	2Q19 Market Share		2Q20/2Q19 Revenue Growth
1. Dell Technologies^a	$519.6	27.9	%	$533.2	29.0	%	-2.6	%
2. Nutanix	$253.5	13.6	%	$258.8	14.1	%	-2.0	%
3. Hewlett Packard Enterprise	$130.0	7.0	%	$84.7	4.6	%	53.5	%
Rest of Market	$955.9	51.4	%	$961.3	52.3	%	-0.6	%
Total	$1,859.1	100.0	%	$1,838.0	100.0	%	1.1	%
Source: IDC Worldwide Quarterly Converged Systems Tracker, September 17, 2020

Table Notes:

^a Dell Technologies represents the combined revenues for Dell and EMC sales for all quarters shown.

In terms of the HCI systems’ software brand, new systems running VMware hyperconverged software delivered revenue of $722.9 million in 2Q20, or 38.9% of the total market. Systems running Nutanix hyperconverged software had $554.1 million in 2Q20 vendor revenue or 29.8% of the total market. Both amounts represent the value of all HCI hardware, HCI software, and system infrastructure software sold, regardless of how it was branded at the hardware level. As hardware sales are a major factor in these data, the chart should not be assumed to solely reflect, or completely align with, the respective companies’ overall software performance.

Top 3 Companies, Worldwide Hyperconverged Systems Revenue Attributed to Owner of HCI Software, Q2 2020 (revenue in $M)
Company	2Q20 Revenue	2Q20 Market Share		2Q19 Revenue	2Q19 Market Share		2Q20/2Q19 Revenue Growth
1. VMware	$722.9	38.9	%	$702.2	38.2	%	3.0	%
2. Nutanix	$554.1	29.8	%	$521.9	28.4	%	6.2	%
T3. Hewlett Packard Enterprise*	$83.3	4.5	%	$87.6	4.8	%	-4.9	%
T3. Cisco*	$76.7	4.1	%	$114.0	6.2	%	-32.8	%
Rest of Market	$422.1	22.7	%	$412.3	22.4	%	2.4	%
Total	$1,859.1	100.0	%	$1,838.0	100.0	%	1.1	%
Source: IDC Worldwide Quarterly Converged Systems Tracker, September 17, 2020

Table Notes:

* IDC declares a statistical tie in the worldwide converged systems market when there is a difference of one percent or less in the share of revenues or unit shipments among two or more vendors.

Taxonomy Notes

Beginning with the release of 2019 results, IDC has expanded its definition of the hyperconverged systems market segment to include a new breed of systems called Disaggregated HCI (hyperconverged infrastructure). Such systems are designed from the ground up to only support distinct/separate compute and storage nodes. An example of such a system in the market today is NetApp’s HCI solution. They offer non-linear scaling of the hyperconverged cluster to make it easier to scale compute and storage resources independent of each other while offering crucial functions such as quality of service. For these disaggregated HCI solutions, the storage nodes may not have a hypervisor at all, since they don’t have to run VMs or applications.

IDC defines converged systems as pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment, and basic element/systems management software. Systems not sold with all four of these components are not counted within this tracker. Specific to management software, IDC includes embedded or integrated management and control software optimized for the auto discovery, provisioning and pooling of physical and virtual compute, storage and networking resources shipped as part of the core, standard integrated system. Numbers in this press release may not sum due to rounding.

Certified reference systems & integrated infrastructure are pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment, and basic element/systems management software. Integrated platforms are integrated systems that are sold with additional pre-integrated packaged software and customized system engineering optimized to enable such functions as application development software, databases, testing, and integration tools. Hyperconverged systems collapse core storage and compute functionality into a single, highly virtualized solution. A key characteristic of hyperconverged systems that differentiate these solutions from other integrated systems is their scale-out architecture and their ability to provide all compute and storage functions through the same x86 server-based resources. Market values for all three segments includes hardware and software but excludes services and support.

IDC considers a unit to be a full system including server, storage, and networking. Individual server, storage, or networking “nodes” are not counted as units. Hyperconverged system units are counted at the appliance (aka chassis) level. Many hyperconverged appliances are deployed on multinode servers. IDC will count each appliance, not each node, as a single system.

For more information about IDC’s Worldwide Quarterly Converged Systems Tracker, please contact Lidice Fernandez at 305-351-3057 or lfernandez@idc.com.

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