Editor’s note: Stephanie Long is a research analyst in TBR’s Data Center Practice, contributing to TBR’s quarterly syndicated reports researching vendors including Dell Technologies, Lenovo, Fujitsu, Hewlett Packard Enterprise (HPE), IBM and NetApp across the spectrum of data center technologies. Stephanie also provides assessment and analysis on vendors’ financial and market strategies for TBR’s benchmark reports.

  • What do you see as major trends in the area you cover?

It’s an exciting time in the data center market. Over the past year, we have seen substantial changes to the vendor market landscape with vendors such as HPE undergoing massive portfolio overhauls and legacy Dell acquiring EMC and creating Dell Technologies.

The market dynamics are evolving as vendors adapt to address shifting data center customer demands, such as for holistic, off-the-shelf infrastructure solutions. Vendors are increasingly specializing and partnering to deliver a portfolio of products that provides the capabilities customers require. This is evident by portfolio enhancements recently announced by vendors such as HPE and Dell Technologies. Both vendors have evolved their portfolios to be more infrastructure-centric while shedding their less infrastructure-centric assets.

NetApp and IBM also recently announced shifts to increase their presence in the hyperconverged market, as hyperconverged infrastructure is a key technology leveraged to address customers’ demands for holistic solutions.

Evolving customer demands are requiring vendors change not only their portfolios but also their go-to-market approaches. Vendors including HPE, Dell Technologies and Lenovo are investing to modernize their channel programs to accommodate these changes as well.

  • Looking ahead, how do you see the data center market evolving?

I anticipate increasing demand for holistic solutions, but the value will come more and more from the software that is layered on top of the data center hardware. Software-defined infrastructure (SDI) increases agility and flexibility while increasing and simplifying customers’ control over their data center environments; therefore, customers will increasingly turn to SDI for modern solutions.

Although there will likely be greater value placed on the software within data center environments, hardware will retain its worth. Data center vendors are configuring their hardware, still a key asset, to better suit these software-related infrastructure needs. However, the increasing emphasis on software in the data center will continue to pressure the hardware’s margins. Cloud environments, whether public, hybrid or private, will continue to alter the data center infrastructure sales dynamic.

The rising presence of public and hybrid clouds is boosting demand for hardware by service providers (SPs) and ultimately pushing the evolution of data center vendors’ go-to-market strategies. We are seeing this play out in the early stages with Dell Technologies’ recently announced Cloud Flex consumption model for hyperconverged infrastructure.

Further, the competitive dynamics between OEMs and ODMs are intensifying as Tier 1 customers, in some cases, turn to ODMs for their hardware needs.