How Cisco’s Data Center Business Is Looking for Fiscal 3Q17

HPE leads the data center segment

In the previous parts of this series, we discussed how Cisco Systems (CSCO) is one of the major players in the network infrastructure segment, leading the infrastructure market in areas like switching, routing, security, and collaboration. But according to Synergy Research Group, Hewlett Packard Enterprise (HPE) is the major player in the data center space—one of the few places where Cisco is not the largest company in terms of market share.

How Cisco’s Data Center Business Is Looking for Fiscal 3Q17

Synergy’s report also notes that Cisco had a share of 33% in the trailing 12-month period in the enterprise infrastructure market, which was valued at $88 billion at the end of 2016. Revenues from data center servers—one of the largest subsegments in the enterprise infrastructure market—fell 5% YoY (year-over-year) in 2016, primarily driven by transitions to the cloud. Cisco is now the fifth-biggest player in the data center server space.

The US (SPY) accounts for 45% of major cloud and Internet data center sites, followed by China and Japan, at 8% and 7%, respectively. Amazon Web Services (AMZN), Microsoft (MSFT), and IBM (IBM) are the companies with the largest data center footprints.

Data center revenue fell 4% YoY in fiscal 2Q17

Cisco Systems’ Data Center business revenue fell 4% year-over-year in fiscal 2Q17. Revenue from this segment fell from $820 million in fiscal 2Q16 to $790 million in fiscal 2Q17.

Cisco’s next-generation data center portfolio is expected to enable public, private, and hybrid cloud deployments. To be sure, Cisco is aiming to become a market leader in the data center space and provide world-class private and hybrid cloud solutions to businesses around the world.