Server, storage and networking infrastructure revenue rose 4.8 percent to $38.8 billion during the first quarter of 2019, analyst firm Canalys said.
The server, storage and networking infrastructure market revenue grew 16.3 percent in 2018. A slowdown in capital expenditure by the hyperscale cloud builders, weakness in service provider spending, the end of the mainframe refresh cycle, and smaller expansion in enterprise server and storage sales were the main factors.
Server shipments grew 3.7 percent during the quarter against 39.2 percent in the same period a year ago. Server refresh is ongoing in businesses, but emphasis is being placed on integrating multi-cloud services with existing on-premises resources as part of hybrid-IT strategies and simplifying operations.
“Vendors have become accustomed to high double-digit percentage growth rates over the last 18 months, fueled by rising ASPs, due to server refresh, component price rises and demand for higher configurations to support more compute-intensive workloads,” Canalys Principal Analyst Matthew Ball said.
Storage shipment growth was 4.6 percent compared with 19.8 percent in Q1 2018. All-flash arrays and hyperconverged infrastructure remain key investment areas. Data management will be a critical part of hybrid-IT strategies, as businesses look to optimize multiple storage resources to store, process and analyze the increasing volume and variety of data being produced.
Networking revenue increased 6.5 percent. Refresh of campus networks continued and the transition to Wi-Fi 6 gained traction, while data center switching was flat. SD WAN has emerged as a key growth opportunity, as businesses optimize and secure branch access to cloud-based services.
Canalys forecasts worldwide infrastructure shipments will grow 6.4 percent in 2019.
Technology vendors have faced challenges due to the trade war, in terms of managing supply chains to reduce exposure to US tariffs and shifting manufacturing from China. The short-lived threat of tariffs on imports from Mexico would have made the situation even more challenging for vendors.
Cisco, Dell EMC and Hewlett Packard Enterprise (HPE) are the top three infrastructure market leaders in Q1 2019.
Cisco dominated each segment of the networking market.
Dell EMC made gains in the channel in both servers and storage.
HPE is the leading challenger in all segments, with its Aruba wireless LAN business taking further share.
China-based Huawei was the fourth largest vendor, accounting for 7.3 percent. Huawei is facing the biggest supply chain challenges among any of the top four vendors, given the US Executive Order signed on 15 May.