October 11, 2017

Growth and opportunities continue in converged market

By Lloyd McCoy
Manager, Market Intelligence
immixGroup, An Arrow Company

The converged systems market has been growing rapidly with companies investing in the simplicity and cost savings solutions are expected to deliver. It’s gaining momentum for companies selling converged solutions to commercial and public sector users.

IDC says the worldwide converged systems market revenue increased by 4.6% year-over-year to $2.67 billion during the first quarter of 2017. It also consumed 1.48 exabytes of new storage capacity during the quarter, which was up 7.1% compared to the same period a year ago.

IDC distinguishes between three converged market segments: integrated systems, certified reference systems, and hyper-converged systems.

  • Integrated systems are pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment and basic element/systems management software. During the first quarter of 2016, the integrated systems market generated revenues of $1,584.25 million. This represented a year-over-year increase of 1.8% and 62.8% of the total market value.
  • Like integrated systems, certified reference systems are pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment and basic element/systems management software. Certified reference systems, however, are designed with systems from multiple technology vendors. Certified reference systems sales rose 0.3% year-over-year during the first quarter of 2016, generating $567.95 million worth of sales. This amounted to 22.5% of the total market value.
  • Hyper-converged systems collapse core storage and compute functionality into a single, highly virtualized solution. A key characteristic of hyper-converged systems that differentiates these solutions from other integrated systems is their ability to provide all compute and storage functions through the same server-based resources. Hyper-converged sales grew 148.0% year-over-year during the first quarter of 2016, generating $371.88 million worth of sales. This amounted to 14.7% of the total market value.

Converged and the Government

The hyper-converged market in the public sector is also strong. Government agencies have been cutting back on the amount of siloed data centers and systems across the federal landscape by implementing regulations such as the Federal Data Center Consolidation Initiative, the Data Center Optimization Initiative and Cloud First policies.

These policies have been tremendously effective at reducing costs from legacy stove-piped IT, while streamlining functionality by encouraging purchasing of cutting edge integration and converged systems.

The amount of hardware within the government is decreasing, but the market has never been better for connected and hyper-converged technology suppliers who can help systems run more efficiently and faster. Agencies’ missions that call for large amounts of data processing and scientific computation, such as NASA, the Federal Aviation Administration and the National Oceanic and Atmospheric Administration have the largest demand for these hyper converged systems and environments, but other agencies also have some opportunity for speedy and reliable communication and data processing.

Connected technologies that aid in virtualization, storage and networking will be in demand in FY18. The government spent more than $1.2 billion on these solutions in FY17.

If the anticipated growth of the converged systems market is a path you would like your business to take, Arrow supports you in your efforts. Arrow’s Data Center Convergence program helps you get all of your customers’ servers, storage and networking devices to work together. You’ll also get valuable business tools, information and the support you need to create a fully virtualized architecture for your customers. To learn more about the Data Center Convergence program, contact your Arrow representative.

Kevin Shaker, a senior analyst for immixGroup, an Arrow company, contributed to this article.