Dell owner Michael Dell as well as investors in Hewlett Packard Enterprise ( HPE ) and IBM ( IBM ) — the big 3 computer server companies — ought to appreciate Bernstein’s latest take on how much the cloud is cannibalizing the server market. It’s not, says the investment bank. “Isn’t it unbelievable?” chided Bernstein analyst Pierre Ferragu in a Friday research note re-issued Tuesday. “The cannibalization theory most investors and industry observers take for granted and as an axiom to any proper thinking about the future of this industry is just plain wrong: The cloud grew from zero to approximately 20% of total enterprise compute while shipments into traditional data centers kept stable” from 2005 through 2015, he said, using Gartner and Bernstein estimates that showed server shipments near 8 million units annually during those 11 years. “Want a last nail in the coffin of this silly cannibalization theory?” Ferragu wrote. “Over the same 2005-2105 period, virtualization went from zero to about 70% penetration, increasing on average the utilization rate of servers by a factor of approximately seven times. This didn’t trigger any cannibalization either (although countless sell-side analysts and investors take it for granted that virtualization killed the server market).” What happened was “very simple,” Ferragu explained. From 2005 through 2015, thanks to virtualization and the cloud, the cost of computing fell sharply. That sharp fall “never meant money spent on compute capacity decreased,” he said. “It meant the amount of compute consumed by enterprises went through the roof. Nothing was ‘moved to the cloud.’ The cloud brought exceptionally cheap compute and enterprise used it to grow their consumption of compute.” In December, Gartner said Q3 server shipments rose 9.2% from the year-earlier quarter, and server revenue rose 7.5%. By company, what became Hewlett Packard Enterprise on Nov. 1 led the world in Q3, with server revenue up 9.1% to $3.7 billion for the quarter, followed by Dell up 9% to $2.4 billion, then IBM up 5.1% to $1.3 billion, after it sold its lower-end x86 server business to Lenovo. “Dear reader, you probably consume 1,000 times more mobile data than in 2005, about 100 times more Internet traffic in general and you use on average about 1,000 times more transistors in your life,” said the analyst. Total cloud revenue will grow about 50% annually over the next five years, and assuming cloud revenue per server will grow at 10% annually, largely due to Amazon ( AMZN ) Web Services, “this still leaves us with about 40% per annum growth in server count,” Ferragu said. “As we saw absolutely no sign of slowdown while the cloud went from zero to 20% of compute, our intellectual honesty forces us to consider traditional enterprise data center will remain broadly stable. … “The cloud will grow easily to well over 50% — actually 60% in our forecast — of the total of compute volumes in five years.” In the stock market today , shares of HPE rose nearly 1% and IBM rose a fraction. Privately held Dell is in the process of acquiring storage systems leader EMC ( EMC ), which was flat Tuesday.