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The data center server market is estimated to grow at a CAGR of 15.27% between 2022 and 2027. The size of the market is forecast to increase by USD 115 billion. The primary factors influencing the growth of the market are investments in scaling up in-house data centers, and hyper scalers continuing to upgrade and expand their data centers.
Key industry players leading the market include Egenera, Fujitsu, Hewlett Packard Enterprise, Hitachi, and Huawei Investment and Holding.
This report extensively covers market segmentation by application (commercial server and industrial server), type (rack server, blade server, tower server, microserver, and open compute project (OCP) server), and geography (North America, APAC, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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One of the major factors driving the market growth is enterprise server refresh cycles. Enterprises typically go through IT system refresh cycles to ensure that their server, storage, and network infrastructure are able to meet future computing demands, which is leading to an increased demand for servers. Along with standard x86 server units, enterprises are now interested in purchasing highly configured servers for high-performance computing tasks. This has resulted in several vendors securing major server refresh deals with their customers. For instance, HPE announced during its Q1 2019 earnings call that it had signed a deal with Telefonica in Spain to update its technological infrastructure. Similarly, Dell Technologies announced during its Q4 2019 earnings call that it had completed the infrastructure upgrade and installation of its VxRail hyper-converged infrastructure in the data centers of a consumer retailer. Additionally, the company also revealed that it had signed a contract with a US-based supermarket chain to construct a new data center.
The investments in scaling up in-house data centers are notably driving the data center server market growth, although factors such as server workload optimization may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Key Data Center Server Market Driver
The investments in scaling up in-house data centers are notably driving market growth. Despite the rapid adoption of cloud services, enterprises are increasingly investing to scale up their in-house data centers. This can be attributed to the increasing preference of enterprises for adopting a hybrid cloud approach over moving all their computing requirements to a public cloud.
Due to several benefits of the public cloud, enterprises are opting for a more practical alternative hybrid cloud. In the hybrid cloud model, the business-critical applications are hosted in the private cloud environment (in-house data center or off-premise private cloud), while the other applications are moved to the public cloud. Hence, the market is witnessing a surge in demand from enterprises that are scaling up the server count in their in-house data centers.
Significant Data Center Server Market Trend
The use of server disaggregation to improve utilization rates is the key trend in the market. Server disaggregation refers to logically break up the server's components into subsystems - memory and compute. Data centers are looking at alternatives that can enhance their server utilization rates and subsequently reduce their power consumption. The reason is as server utilization rates increase, fewer servers are required to process the existing workloads, which reduces power consumption. Server disaggregation is one way of increasing server utilization rates.
Also, server disaggregation helps prevent the replacement of the entire server to substitute just one part or component. Depending on the requirements, resources can be procured to add to the respective system independently. Disaggregated servers can be reused for different applications with different resource requirements. These benefits will help the market in focus grow during the forecast period.
Major Data Center Server Market Challenge
Server workload optimization is the major challenge affecting market growth. Advanced technologies such as big data analytics and artificial intelligence have enabled enterprises to analyze huge amounts of granular datasets to get relevant and updated insights on the different aspects of their business (production, customer, distribution, and supply chain). Therefore, enterprises and data center service providers need sophisticated and high-performance servers to handle these workloads.
Since these workloads challenge the computing capacity of servers when enterprises and data center service providers upgrade their existing infrastructure, they face issues with optimum utilization of the servers' computing capacity. Additionally, other areas of concern are the power and physical space constraints in data centers and the unexpected surge in enterprise server capacity demands, which further increase the complications.
Key Data Center Server Market Customer Landscape
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Data Center Server Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Inspur Systems Inc. - The company offers data center servers such as NF8480M6, NF8260M6, and NF5280M6. The company offers data center and cloud computing solutions that are used in various applications, such as open computing, cloud, AI, and deep learning.
The report also includes detailed analyses of the competitive landscape of the market and information about vendors, including listed below:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The reports categorize the global data center server market as a part of the global technology hardware, storage, and peripherals market within the overall global information technology market. The parent global technology hardware, storage, and peripherals market covers manufacturers of cellular phones, personal computers, servers, electronic computer components, and peripherals. Our research report has extensively covered external factors influencing the parent market growth during the forecast period.
The market share growth of the commercial server segment will be significant during the forecast period. Communication service providers and colocation service providers are rapidly expanding their data centers. Key vendors such as Dell, Cisco, and Fujitsu will invest in new data centers, which will propel the market in focus during the forecast period. For instance, in October 2022, Cisco invested in data center capacity for WebEx, its remote conferencing, file sharing, and contact center operation services suite, in India. Thus, investment in the data center will leverage data center servers and, in turn, will drive the market in focus during the forecast period.
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The commercial server segment was valued at USD 50.50 billion in 2017 and continued to grow until 2021. Digital transformation efforts such as digital transactions, cybersecurity, and accounting require flexible and agile data centers to support the changing needs of organizations. Organizations may need to scale resources such as computing or storage to support their changing business needs. The commercial server can provide resources on demand, and their flexible pricing model makes them an ideal choice for organizations. Thus, the ongoing digital transformation will drive the demand for the data center, leveraging commercial servers. These will drive the growth of the market in focus during the forecast period.
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North America is estimated to contribute 35% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The demand for data center servers will be high during the forecast period in North America, driven by higher investments by hyper-scale cloud providers, colocation service providers, and enterprises that are upgrading their IT infrastructure to support edge computing, 5G, multi-cloud services, big data analytics, and IoT. The US is the data center hub in North America, with Atlanta, Northern Virginia, Chicago, Dallas/Ft. Worth and Silicon Valley dominate the data center market in the region. Several data center service providers and enterprises have announced their expansion plans, which would drive the server market in the region.
The US has witnessed substantial investments in the field of edge computing, and the adoption of edge data centers increased in the past few years. Various companies in the region are also focusing on setting up dedicated edge data centers. The data center is being designed to cater to clients that need to manage confidential data. Therefore, the increase in focus on edge computing and the rising adoption of edge data centers are expected to drive the demand for data center servers.
Several commercial enterprises, industries, and institutions partially shut down their operations due to the COVID-19 pandemic. The lockdowns in the region compelled people to work from home and contain the spread of COVID-19. This further increased data generation, which led to a rise in investments in data centers due to the growing demand for computing and storage resources to support 5G-enabled applications. In addition, rising investments in 5G networks will address the demand for high bandwidth significantly. This will drive the regional market in focus during the forecast period.
The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
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Data Center Server Market Scope |
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Report Coverage |
Details |
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Page number |
182 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 15.27% |
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Market growth 2023-2027 |
USD 115 billion |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
13.82 |
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Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
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Performing market contribution |
North America at 35% |
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Key countries |
US, China, Australia, Japan, and UK |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Atos SE, Cisco Systems Inc., Dell Technologies Inc., Digital Realty Trust Inc., Egenera Inc., Fujitsu Ltd., Hewlett Packard Enterprise Co., Hitachi Ltd., Huawei Investment and Holding Co. Ltd., Inspur Systems Inc., International Business Machines Corp., Iron Systems Inc., Lenovo Group Ltd., NEC Corp., Oracle Corp., Quanta Computer Inc., Schneider Electric SE, Super Micro Computer Inc., Trend Micro Inc., and Unisys Corp. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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