How Real Is Everything as a Service? Revenue Reality Check

Enterprise IT vendors such as Cisco Systems, Dell Technologies, and Hewlett Packard Enterprise continue to tout Everything as a Service (EaaS or XaaS) business and technology consumption models — essentially offering hardware, software and associated support for a monthly subscription fee.

The efforts are branded as Cisco Plus, Dell Apex and HPE GreenLake. In some ways, those efforts reflect growing customer demand for all types of scale up/scale down technology — which allow partners and end-customers to avoid massive capital expenditures (CapEx). But in other ways, the EaaS vendor efforts are a response to widely popular, fast-growing public cloud services from Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform.

So, how popular are Everything as a Service technology consumption models? The three-part answer, according to ChannelE2E’s market analysis, reads something like this:

  1. Everything as a Service revenues are growing — and in some cases, that growth is rapid;
  2. but Everything as a Service dollar figures remain tiny compared to the far-more-popular, still-growing public cloud options like AWS, Azure and Google Cloud; and
  3. the revenue gap between public clouds and Everything as a Service alternatives appears to be widening.

Everything as a Service: HPE GreenLake Revenue Clues

The latest Everything as a Service revenue clues come from HPE, where as-a-service orders rose 136 percent in Q1 of fiscal 2022, the company indicated. That sounds impressive. But for the quarter, HPE’s annual recurring revenue (ARR) was $798 million —¬†relatively small compared to the billions of dollars that AWS, Azure and Google Cloud generate each quarter.

HPE mainly credited the HPE GreenLake initiative for that ARR growth. GreenLake essentially makes all of HPE’s hardware and software available as a service for partners and customers to consume. The latest offerings and enhancements include GreenLake for Aruba Networking; block storage; backup and disaster recovery (BDR); and plenty more, according to multiple HPE announcements on March 22, 2022.

To further accelerate that growth, HPE GreenLake is now available via such cloud marketplaces and distributors as ALSO Group, Arrow Electronics, Ingram Micro and TD Synnex.

Dell Apex and Cisco Plus Revenue Clues?

In some ways, the latest HPE GreenLake moves mirror similar developments from Dell last quarter. Indeed, Dell Everything as a Service milestones included APEX Multi-cloud Data Services and APEX Backup Services¬† according to Dell’s February 2022 earnings call.

Still, Dell did not provide Apex annual recurring revenue (ARR) clues during that February 2022 earnings call. Moreover, Dell sidestepped some Apex revenue questions from Wall Street analysts during a November 2021 earnings call.

Cisco, meanwhile, continues to accelerate its Everything as a Service business on multiple fronts. In the channel, MSPs focused on monthly recurring revenues (MRR) are now Cisco’s fastest-growing go-to-market community, Channel Chief Oliver Tuszik said during a media briefing in March 2022. Many of those MSPs are embracing SaaS-centric platforms like Duo and Meraki, he noted.

Take a closer look, and Cisco’s annualized recurring revenue (ARR) was $21.9 billion in the second quarter of fiscal 2021, up 11 percent from Q2 last year, the company said in February 2022. During that earnings call, Cisco also indicated:

  • Fully 80 percent of Cisco’s software revenue is now subscription based; and
  • total quarterly subscription revenue was $5.5 billion, representing 44 percent of total quarterly revenues.

Still, ChannelE2E has not seen actual revenue figures tied specifically to the Cisco Plus strategy.

Public Cloud Revenues: Massive and Growing

Meanwhile, channel partners and customers continue to rapidly shift customer workloads toward public cloud services. The latest evidence:

  • AWS revenue was $17.8 billion in Q4 of 2021, up 39.5 percent year over year.
  • Microsoft Azure, 365 and productivity tools revenue was $18.5 billion in the company’s most recent quarter, up 26 percent year over year.
  • Google Cloud revenue was $5.54 billion in the most recent quarter, up 45 percent from the corresponding quarter last year.

Bottom line? Enterprise companies such as Cisco, Dell and HPE are generating top-line revenue growth. And Everything as a Service (XaaS) appears to be influencing that growth in a positive way. Still, the Everything as a Service business trend — at least at present — appears relatively small compared to the continued public cloud tidal wave.

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