With mentions in four out of the top 10 data center stories of the year, Broadcom's acquisition of VMware was pretty much the biggest overall story of 2023. It didn't help that the approval process dragged on as each country's regulators looked at the deal anew and weighed how it would affect their markets.
In the meantime, speculation was rampant as Broadcom isn't exactly known for its careful treatment of the companies it's acquired in the past. Our No. 2 story explored whether VMware's cloud-native Tanzu platform and security-focused Carbon Black product would survive the transition.
[Related: VMware integration to cost Broadcom $1B, Carbon Black goes on the block]
Existing VMware customers were also concerned, some enough to jump ship and find other providers. Nutanix rode the wave and was able to capitalize on the buzz by forming a partnership with Cisco in our No. 3 story.
Other big data center news from the year included the difference in intended users for data center switches from Arista versus those from Cisco, as analyzed in our top story for the year.
The battle for data center superiority also heated up as Google, Azure and AWS went head to head (or, rather, center to center). The winner of that contest very well may be the folks who design and construct data centers, as our No. 6 story focused on data center construction and our No. 9 story looked at data center rack density, which is also growing.
Here are the top 10 data center stories of 2023, based on aggregate page views:
1. Hyperscalers have been choosing Arista over Cisco for data center switchesThe data center switch market broke its fifth consecutive quarter of sales records in Q2 2023, with Cisco and Arista Networks positioned as the leading vendors.
According to a report from Dell’Oro Group, No. 1 Cisco increased its revenue share by two points, No. 2 Arista by four points and Hewlett Packard Enterprise (HPE) by one point in the second quarter.
2. Could Tanzu, Carbon Black be casualties of Broadcom’s VMware acquisition?In July, United Kingdom regulators gave a provisional stamp of approval to Broadcom’s pending $69 billion acquisition of VMware, which added to its momentum toward an increasingly likely closing. However, analysts remained concerned on the long-term ramifications of the proposed deal.
Tracy Woo, senior analyst at Forrester Research, said in an interview with SDxCentral, “If anything, [Broadcom is] great at getting maximum value in the now, in the present. They’re not interested in long-term, sustainable revenue and profitability. They are interested in profitability now and five years down the road.”
This focus could imperil some of VMware’s internal operations, with Woo pointing toward products like its cloud-native Tanzu platform and its security focused Carbon Black products.
3. Nutanix partners with Cisco, looks to capitalize on VMware-Broadcom buzzTo expand its growth in the hybrid cloud and hyper-converged infrastructure (HCI) markets, Nutanix formed a global strategic partnership with Cisco in September, continuing to compete with VMware and moving into artificial intelligence (AI) support with its GPT-in-a-Box launch.
The Cisco partnership was expected to strengthen Nutanix’s competitive positioning in the hybrid cloud and HCI market. The company had been seeing customer engagement related to potential concerns around Broadcom’s pending (at the time) VMware acquisition.
4. How does Broadcom feel about VMware’s work with Nvidia?In August, the tech industry was looking for some peace of mind as the expected closing date for Broadcom‘s acquisition of VMware drew closer. This was especially true after the release of VMware’s new private artificial intelligence (AI) platform designed to work with Nvidia chips.
But what did Broadcom — a company that also produces data center chips — think about this extension of VMware’s partnership with rival chipmaker Nvidia? Especially considering the market’s similar concerns during VMware’s former stints under EMC and Dell ownership.
5. Google, Azure and AWS battle for the hyperscale data center marketHyperscalers Google, Azure and Amazon Web Services (AWS) are involved in an arms race to cover more ground, offer more territories with higher availability and deliver a wider range of low-latency services. As a result, they are building new data centers, leasing many more and expanding into new territories.
According to Synergy Research Group, the top three cloud providers account for 65% of the worldwide market. At the end of the first quarter of 2023, that meant 32% for AWS, 23% for Microsoft Azure and 10% for Google Cloud Platform (GCP). The next 20 providers have only carved out a combined 26% slice of the pie.
6. Why the data center construction business is boomingThe data center construction business has never been healthier. Despite inhibiting factors such as power availability and demands to reduce the carbon footprint, data center growth is fierce and shows no signs of slowing down any time soon.
According to Synergy Research Group, public cloud providers spent $120 billion on building, leasing and equipping data center infrastructure in 2022, up 13% from the previous year. Hyperscalers Microsoft, Google and Amazon Web Services (AWS) all experienced almost 30% revenue growth in their platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings. Their combined data center numbers grew by 15% in 2022, raising their overall data center capacity by 18%.
7. Big tech ESG scorecard: Rating Cisco, Dell, HPE, IBM and VMware on sustainabilityEnvironmental sustainability has become a top 10 enterprise priority for CEOs, according to Gartner research. But to some technologists, that’s obvious even without the press releases. As global businesses digitally transform, IT vendors grow increasingly aware of the pressure to operate with their environmental impacts in mind.
Gartner analysts predict that by 2026, 75% of organizations will increase the amount of business they do with IT vendors that are focused on specific environmental, social and governance (ESG) goals “and will seek to replace vendors” that don’t demonstrate sustainability progress.
8. How low will data center capex drop in 2023?Data center capex for cloud service providers Amazon, Microsoft, Meta, and Google saw 33% growth in 2022 and almost broke $100 billion. But as of the time of this story in February 2023, the market was shaping up to be a different story, according to Dell‘Oro Group Research Director Baron Fung’s exclusive Q4 cloud service provider market highlights.
Spending was maintained during 2022 as cloud providers neared the end of their data center expansion cycles, extended data center footprints in new regions, and focused on artificial intelligence (AI)-optimized infrastructure, Fung told SDxCentral.
9. Data center rack density: How high can it go?Data centers are being planned, ordered and commissioned in record numbers. This is shown in statistics such as a 50% increase being forecast for the power footprint of data centers by 2025, as well as 500% growth in global data generated between 2019 and 2025, according to the Uptime Institute.
Data centers are being built in unprecedented numbers and at far higher compute densities than ever before. Data centers need to pack more punch per rack or per square foot to keep up with demand.
10. Broadcom’s VMware deal hit by UK hurdleBroadcom’s pending acquisition of VMware was hit with another hurdle at the end of March as the United Kingdom’s Competition and Markets Authority (CMA) regulator initiated an advanced review phase on the deal. That move came a week after the same regulator expressed competitive concerns over the pending mega-acquisition on the data center virtualization market.
The CMA in a statement noted it was moving the review of the acquisition to a “phase 2 investigation.” The move came after Broadcom informed the CMA that it would not be providing any “undertakings” following the completion of the initial review process.
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