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HP Surpasses Cisco Systems in Cloud Infrastructure Space

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HP named leader of the cloud infrastructure equipment market

Recently, Hewlett-Packard (HPQ) announced its fiscal 3Q15 results. While the company’s earnings performance did generate some promise, investors will have much more clarity after the company breaks up and after the subsequent execution of the two companies.

After November 1, 2015, HP will officially be split into two independently traded companies. Hewlett-Packard Enterprise will focus on enterprise technology, software, and services. HP Inc. will focus on computer/PC (personal computer) and printer operations.

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While all this has been going on, Synergy Research Group on September 9, 2015, released its calendar 2Q15 data on the cloud infrastructure equipment market. HP emerged as the leader in this rapidly growing space. In the last quarter, both HP (HPQ) and Cisco Systems (CSCO) were in a tied position. However, in 2Q15, HP commanded 13% market share, followed by Cisco that lost half a percentage point market share.

HP dethrones Cisco for the first time in cloud infrastructure space

Cisco, a network equipment manufacturer, has been a leader in the cloud infrastructure space since 2013. In 2Q15, HP managed for the first time to dethrone Cisco from its leadership position.

Other leading players in this space include Microsoft (MSFT), Dell, IBM (IBM), EMC (EMC), VMware (VMW), Lenovo (LNVGY), and Oracle (ORCL). The above chart shows the market share of players in this space over the past few quarters.

Cloud infrastructure market is growing at a rate of 25% on a year-over-year basis

The revenue of the total cloud infrastructure equipment market is now growing at approximately $16 billion per quarter, which translates to annualized revenue of $64 billion. On a year-over-year basis, this growth is 25%. Cloud infrastructure equipment market revenue includes both hardware and software.

If you’re bullish about HP, you might consider investing in the Technology Select Sector SPDR ETF (XLK), which invests about 1.25% of its holdings in HP.

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