Dell Technologies and Nutanix remain the crown jewels of the hyperconverged infrastructure (HCI) market despite being outshined by Hewlett Packard Enterprise’s (HPE) second-quarter HCI revenue growth, which soared 53.5%, according to IDC’s second quarter 2020 Worldwide Quarterly Converged Systems Tracker. Meanwhile, both Dell and Nutanix saw slight HCI revenue declines.  

IDC's latest HCI market tracker also found that during Q2, worldwide converged systems revenue decreased 4.5% year over year to $3.9 billion. Sebastian Lagana, research manager for infrastructure platforms and technologies at IDC, said this marked the first drop since the analyst firm began its quarterly converged systems tracking. He also noted that first quarter 2020 revenue was essentially flat.

"The overall converged systems market showed a decline during a difficult second quarter as broader weakness in enterprise buying across server and storage also impacted HCI," said Paul Maguranis, senior research analyst at IDC in a statement.

Dell and other data center infrastructure vendors continue to face weak demand due to the COVID-19 pandemic and remote workforce.

IDC tracks the converged infrastructure market quarterly and segments the market into three groups: certified reference systems and integrated infrastructure, integrated platforms, and HCI systems. HCI is always the fastest growing of these three segments — and the most competitive among vendors.

During the second quarter, certified reference systems and integrated infrastructure (7.6%) and integrated platforms (13.1%) market revenues declined year over year. These two segments combined account for 53% of the all converged systems revenue.

Revenue from HCI systems sales saw modest success despite headwinds in the market and posted 1.1% growth year over year. According to Maguranis, this small sliver of growth was “mostly due to strong HCI performance in Asia/Pacific, especially in China and Japan."

IDC ranks HCI suppliers in two ways: by the brand of the HCI product or by the owner of the software providing the core hyperconverged capabilities. Because Dell Technologies owns 81% of VMware, it’s safe to say that Dell Technologies came out on top in both rankings.

As it relates to branded HCI systems market, Dell Technologies was the largest supplier with $519.6 million in revenue and a 27.9% share, down 2.6% from the previous year. Nutanix, in second place, generated $253.5 million in branded revenue. This represented 13.6% of the total HCI market during the quarter and a 2% decline in revenue.

Despite coming in behind Dell and Nutanix, with $130 million in revenue and 7% of the market, HPE posted a staggering 53.5% revenue growth during the quarter. 

"HPE’s success and growth is largely connected to the ProLiant DX launch, which is the platform they’re offering that runs on Nutanix," Lagana explained.

This platform series features HPE servers and factory-installed Nutanix software. HPE and Nutanix announced the partnership in April 2019 to bring to market an integrated hybrid cloud appliance designed for on-premises operations.

From the software ownership view of the market, systems running VMware HCI software represented $722.9 million in total second-quarter revenue or 38.9% of the total market. Systems running Nutanix HCI software represented $554.1 million in second quarter vendor revenue, or 29.8% of the total market. Both amounts represent sales of all HCI software and hardware regardless of brand.

As his company nears the finish line in its transition to a software-only business model, Nutanix CEO Dheeraj Pandey took issue with being included in both the branded and software-only HCI ranking. "As a hyperconverged infrastructure software vendor, we believe Nutanix should not be included in a hardware-driven view of the market such as this one which splits our software market share across our OEM partners," he said in an email. "We look forward to IDC sharing an updated software-only view in the coming months which we expect to show Nutanix as the clear software-based HCI market leader.”