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June 11, 2013

Cisco News - Cisco Takes Down IBM, Rules the Roost in Cloud Infrastructure Equipment

By Steve Anderson, Contributing TMCnet Writer

When it comes to just about any market, there's usually some interesting development going on as some new upstart takes over position from a long-standing rival, or as some company that lost ground regains it or the like. One such development recently hit according to new first quarter data from the Synergy (News - Alert) Research Group: IBM is no longer the leader in cloud infrastructure equipment, having lost the crown to Cisco (News - Alert).

According to the Synergy Research Group data, IBM's share of the market had been at a two-year high only just one quarter before the reversal landed. But a combination of factors turned the tables, essentially creating a kind of “perfect storm” to push Cisco out in front. First, the first quarter of 2013 represented a singularly bad quarter in terms of the server market. This not only dealt a blow to IBM (News - Alert), but also to HP. But Cisco, meanwhile, had been focusing development on public cloud networking systems, and when that started to take off, that gave Cisco more than a 15-percent share of the larger cloud infrastructure market.

Synergy Research Group, via founder and chief analyst Jeremy Duke, made it clear that the server market is volatile even in the best of times—Duke referred to it as “subject to substantial quarterly swings”—but also noted that two important trends are coming together to reshape the larger server market and impact the big server vendors like IBM. Duke explains: “Firstly, companies with massive data centers like Google (News - Alert) and Rackspace are increasingly building their own server platforms assisted by ODMs. Secondly, due to the market adoption of Infrastructure as a Service (IaaS), organizations both big and small are increasingly outsourcing their data centers. We believe this will continue to fuel M&A activity, as we have just seen with IBM's acquisition of SoftLayer (News - Alert).”

Basically, what it looks like is that IBM got caught outside the wake of the trend and got a bit battered accordingly. But by like token, it also seems that IBM has plans to get back in on the newer action and be ready to take advantage of it, which means that maybe by the end of the second or third quarter IBM will be able to get back on top of the game by offering up the kind of experience that the user base wants backed up by the name recognition cachet of IBM's decades of experience.

While only time will tell if IBM can get back into the fray with its new acquisition, it seems well-positioned to do just that. Doubtlessly, IBM will be eager to recapture its former top ranking, but then, Cisco will likely be just as eager to defend the top slot, so what Cisco may do in response might just keep it at the top of the heap.

Edited by Alisen Downey

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