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The Future of the Data Center Market is Disruption

by Andrew Lerner  |  August 26, 2014  |  2 Comments

This is a guest blog from Joe Skorupa.

The data center market has enjoyed years of relative stability and gradual technological evolution. That is about to change. In response to the early warning signs in this market, Gartner commissioned a new body of research to help our Technology and Service provider clients deal with the impending disruptions. We published the first research note today:

Four Highly Disruptive Factors Will Challenge the Survival of Incumbent Data Center Market

Joe Skorupa | Adrian O’Connell | Errol Rasit | Jeffrey Cole | Michael Warrilow | Roger W. Cox

Summary: There are four market disruptions in play in the DC infrastructure market. Elements of them are already in play, and will become visible no later than early 2016; however, radical action by just one significant player could accelerate the market disruption of any of the factors. …

A few key takeaways include:

Gartner predicts that by year-end 2016, the DC market will undergo drastic change, driven by four disruptive factors: highly disruptive competition, big cloud provider dominance, economic warfare and nationalism. Elements of these disruptive factors are already in play, and will become visible no later than early 2016; however, radical action by just one significant player could accelerate the market disruption of any of the factors.

By year-end 2017, DC infrastructure vendor gross margins will contract by up to 5 percentage points below current levels. This research was created to help vendor CxOs to understand and prepare for a new DC market. However, it can also help CIOs and VPs of I&O to understand vendor market positions to and to develop a process to assess risk.

This post is being writing while attending VMworld, where VMware CEO, Pat Glesinger, stressed disruption on his keynote and where VMware announced their first hyperconverged infrastructure offering. Clearly the disruptions are underway.

Joe Skorupa

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Category: guest-blog  just-published  

Tags: data-center  disruption  

Andrew Lerner
Research Vice President
6+ years at Gartner
21 years IT Industry

Andrew Lerner is a Vice President in Gartner Research. He covers enterprise networking, including data center, campus and WAN with a focus on emerging technologies (SDN, SD-WAN, and Intent-based networking). Read Full Bio

Thoughts on The Future of the Data Center Market is Disruption

  1. Karsten Scherer says:

    I got a lot out of this research note, thanks to the analysts involved. Given that CIOs look at data center and infrastructure projects as their #2 prio for this year (with BI in pole position, because now that your data has a nice place to live, you might as well do something cool with it), one would think that the potential for disruption wouldn’t be so high. DCs still represent the spine of many organizations. the hyper-scale guys provide interesting alternative models, though. i guess it’s not your father’s DC anymore, gone are the days were all you had to think about were space, power and cooling.

    I hadn’t considered what you’re calling the ‘Snowden effect’, that’s an interesting angle!

    • Andrew Lerner says:

      Thanks for the comment – and yes it certainly isn’t your father’s DC anymore. In fact, given the rapid pace of change/innovation in the DC network after a period of architectural stability that lasted over a decade, I would go a step further to say: This isn’t even your older brothers DC anymore.

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