Big vendors accused macroeconomics for decline of data center hardware sales

According to the earning reports of Hewlett Packard Enterprise, Cisco Systems, and Dell Technologies for the last full quarter this month, weak enterprise data center hardware purchasing was a common theme across the board. Corporate companies’ budgets on data center servers, storage, and networking hardware have declined. The largest companies that sell this equipment like HPE, Dell, Cisco think that the reason is macroeconomic uncertainty caused by trade disputes and other geopolitical tensions.

Cisco’s CEO Chuck Robbins told about this weakness, saying,

“It was mainly apparent in service-provider and emerging-markets segments at the time. But the weakness has now broadened to also include enterprise and commercial segments.”

Negative effects of global trade tensions

HPE CEO Antonio Neri also said about the impact of global trade tensions and other geopolitical factors, saying,

“Ongoing global trade tensions and other geopolitical factors have created uncertainty that contributes to an uneven demand environment said on his company’s earnings call Monday. The elongation of sale cycles we experienced since Q2 continues, particularly in larger deals.”

While HPE’s overall revenue was down 9.1 percent in the quarter, server revenue was down 13%, and storage hardware dropped 12 percent. Dell’s data center hardware revenue for the reported quarter was down 6.1 percent year over year. Servers and networking products category was decreased by 16%, while storage revenue was up 6.9 percent.

Taking advantage of hybrid cloud

With reorienting their businesses to focus on subscription-based services, both Dell and HPE aim to take advantage of hybrid cloud. They provide customers to keep control of at least some hardware that runs their applications and stores their data. These two big vendors are also positioning themselves as end-to-end infrastructure providers for the modern enterprise.

Cisco’s Infrastructure Platforms segment, which includes data center products, declined 1% to $84 million. Likewise, there was a decrease in sales of routing products dragged the entire segment down.

Customer’s need is a flexible delivery model

According to HPE’s CEO Neri, customers need a technology partner that has the expertise, the tools, and a flexible delivery model to help them harness the power of their data across all their clouds and edges.

“HPE is uniquely positioned to meet these needs and provide a consistent cloud-like experience for apps and data everywhere,” he added.

Cisco’s CEO Robbins has been repositioning Cisco for making it less dependent on hardware sales and more on software and services.

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