A new study by Global Industry Analysts released on Tuesday shows that the US is the strongest market for cloud equipment worldwide, while Asia-Pacific is expected to become the fastest growing regional market, led by rapid diffusion of cloud services in China and India.

The research report titled “Cloud Equipment: A Global Strategic Business Report,” defines cloud equipment as being inclusive of servers, storage, networking hardware and high speed links.

According to the report, widespread adoption of cloud services, particularly public cloud services, is driving demand for cloud equipment among cloud based IT service providers.

The report also says that the rise in cloud-related entrepreneurship, increased inflow of cloud-related venture capital funds, and rise in the number of new cloud based data centers are all factors contributing to this growth.

One of the key trends in the report is the emergence of traditional telecom service providers as a “lucrative customer cluster for cloud equipment.” Companies like AT&T and Verizon are investing more in their cloud infrastructure in order to compete, as well as to combat “rapidly falling ARPUs in traditional business areas related to voice communications.” The report also notes that telcom companies require lesser investments to diversify in the cloud services space since they own the network. In 2011, Communication Service Providers around the world invested more than $14.5 billion in cloud related projects.

The emergence of telecoms as cloud service providers could pose a potential threat to web hosts and cloud hosting firms as small businesses look to bundle existing offerings, and may see a telecom as a one-stop shop with phone services, VoIP, video conferencing, Internet, web hosting, and now, cloud.

While Europe continues to be an important market for telecom cloud and cloud-based telecom services – an example from the last week include French telecom Bouygues partnering with NEC on a cloud services marketplace - the report says developing countries will generate increased demand for cloud equipment as companies tap into the cloud.

Major cloud equipment players include Cisco Systems, Dell, EMC, HP, IBM and VMware, among others.

A recent report by Gartner paints a different picture; according to an article by PCWorld, worldwide server shipments declined 0.7 percent year-on-year to 2.3 million units, with revenue declining 5 percent to $11.8 billion. Despite these findings, Dell and Cisco managed growth while HP and IBM struggled during Q1 2013.

According to Gartner research director Adrian O’Connell, with restricted budgets, new servers aren’t considered high priority for many organizations around the world. Is the same true for you, as a service provider?