2-3 years ago I used to write about DCIM, but stopped when I started to talk to more and more companies. I would watch mostly silently and read the different press releases and new product announcements.
The 451 group released on June 21, 2013 an analysis.
DCIM is becoming a necessity for a growing number of datacenter operators, but market penetration and sales cycles have taken longer than anticipated. Another issue is that full DCIM suite deployments are often phased in over time, resulting in staggered revenue for suppliers. Many investors did not foresee these factors, nor did they fully appreciate how adverse to change operators have historically been, among other inhibitors. We believe the overinvestment in the DCIM sector was brought about by a mix of herd behavior and inadequate due diligence (datacenter operators are characteristically guarded, and the market is not often well understood by outsiders). There has been a slowdown in VC, in general, and with too much investment chasing too few large DCIM deals, VCs have largely stepped back from the sector in 2013. If they haven't done so already, VCs and management should be reviewing their prospects. Many investors, but not all, will be disappointed in the next 12-18 months, if not already.
The winners were some of the ones most heavily funded with the prettiest powerpoint slides.
A less welcome fact is that the DCIM supplier sector is overcrowded, with more than 55 companies. More than 80% are privately held; many are venture-capital-backed (see our previous report Will the DCIM supplier bubble slowly deflate?). Although there are still new entrants into the market, enthusiasm in the venture community has cooled.