Synergy: HP Beats Cisco in Cloud Infrastructure Equipment

For the first time in the company’s history, Hewlett-Packard (HPQ) has become the No. 1 player in cloud infrastructure equipment sales, beating longtime market leader Cisco Systems (CSCO) in Q2 2015, according to Synergy Research Group.

HP’s success in the cloud infrastructure market was confirmed in Synergy’s latest data, which found that the hardware and software giant maintained 13 percent worldwide market share in Q2 while Cisco’s share dropped by half a percentage point to 12.5 percent. HP and Cisco had been tied for market leadership for the past two quarters, according to Synergy’s data.

While HP maintains the lead in terms of private cloud market share, Cisco managed to hold onto its lead in public cloud infrastructure, thanks in part to its success in the networking segment and from rapid growth in the server industry, according to the study. HP, meanwhile, gained ground because of its success in the cloud server segment and its continued achievement in capturing new storage customers.

“The public cloud services market is clearly booming and driving heavy investment in cloud infrastructure, while a rapid transition to cloud is also in full swing in the enterprise IT market,” said Jeremy Duke, Synergy Research Group’s founder and chief analyst, in a statement. “Cisco continues to ride these waves very successfully, but what has enabled HP to grab the lead is the fact that servers and storage account for almost two-thirds of the market and HP is now rapidly evolving its huge business in these segments.”

Other players in the cloud infrastructure market—IBM (IBM), Microsoft (MSFT) and Dell—also showed slight increases in market share in Q2, despite lagging far behind HP and Cisco in terms of overall market share.

Synergy said that overall cloud infrastructure equipment revenues, including both hardware and software, now total $16 billion per quarter, which marks a 25 percent year-on-year increase in the industry. And even though HP and Cisco are the current leaders in the space, the rapid increase in revenue means other vendors still stand to turn a large profit as demand continues to increase.

“The good news for all vendors is that this huge market is growing rapidly, and in aggregate the two leaders only account for a quarter of it—much the same as they did a year ago,” said Duke.

HP’s success in the cloud infrastructure market comes just weeks after CEO Meg Whitman confirmed that the company’s Hewlett-Packard Enterprise and HP Inc. businesses are effectively operating as two separate companies, ahead of the anticipated division at the end of the year.