Data Center Server Market - Global Outlook & Forecast 2022-2027

MARKET ANALYSIS

The global data center server market was valued at $90 billion in 2021 and is expected to reach $115 billion by 2027, growing at a CAGR of 4% from 2022 to 2027. The data center server market is witnessing high growth in high-density servers. The most adopted servers in the market include rack and blade servers from vendors such as Cisco Systems, Intel, Fujitsu, Hewlett Packard, Dell Technologies, IBM, and Lenovo. Data centers comprise IT infrastructures such as servers as well as storage and network infrastructure to process and store user data. In IT infrastructures, servers are one of the most crucial infrastructures where the data is stored and processed. Data center operators are adopting high-density servers to improve the efficiency of their data center facilities. It is expected that data center operators are likely to use more rack servers, followed by blade servers. 

The migration of on-premises infrastructure to colocation facilities, and an increase in workload deployments will increase the capital spending for server infrastructure across industry verticals. The need for data center operators to upscale their existing infrastructure due to the increasing preferences for increased rack power density will create the demand for highly advanced servers. The investment in server infrastructure is dominated by ODM servers through an increase in hyperscale investments worldwide, contributing a share of over 25% in 2021. The US and the China markets dominate server infrastructure procurement, with a combined share of over 50% in 2021. The procurement of rack servers still dominates the market, with the adoption of data center blade servers not far behind. The growing edge data center investments will boost the data center market share of micro servers during 2022-2027. Vendors are continuing to innovate their offerings to target certain workloads, mainly cloud, Big Data, Artificial Intelligence, and Machine learning.   

Due to the COVID-19 pandemic, various countries imposed strict lockdowns which resulted in the workforce shifting to remote work. The high adoption of online platforms such as digital banking, video conferencing, and online education has created a demand for high-density and high-performance servers to support the data generated and stored securely. The procurement of server infrastructure solutions plays a vital role in the efficiency of data center infrastructure. It closely allies carbon-neutral goals, because server infrastructure, along with network and storage, consumes over 50% of incoming power in the data centers. 

The following factors are likely to contribute to the data center server market growth during the forecast period:

• Construction of Data Centers Will Increase the Procurement of High-Density Servers
• Impact of Covid-19 on Data Center Market
• Edge Data Centers Will Create Demand for Cost-Effective and Compact Servers
• Increased Digitalization & Development of Internet Infrastructure

Key Highlights of the Data Center Server Industry: 

• North America was the leader in the server market, with a 44% share of the overall market in 2021, followed by APAC. 
• Cloud and telecom are the leading sectors that contributed to a majority of the server demand in 2021 and are expected to be leaders during the forecast period as well. 

• Virtualization and convergence & hyperconvergence will be significant trends in the server market 
• ARM-based and X86 servers are being used by operators across the world. 

Recent Development in the Market: 

• The BFSI sector has started shifting more amount of data to be stored in data centers and requires high-end IT infrastructure to handle the daily transfer of a high amount of data, which has further boosted the data center server market growth. 
• Government organizations across the world have started storing data in enterprise self-built data centers. The growing need for data security and portability and easy accessibility is necessary. The government sector is witnessing significant growth and is thereby fuelling the demand for data centers across the world. 

Data Center construction to Drive Procurement of High-density Servers 

The colocation service providers are making significant contributions to hyperscale data center projects, wherein colocation facilities are being leased by global cloud service providers. Hyperscale facilities are the major contributors to high-density servers for data centers. Investments in high-density servers are likely to increase OPEX for operators. With the help of Open Compute Program can design their own servers to improve the efficiency of their data centers. 

Hyperscale server innovation continues through Open Compute Project

• Hyperscale operators such as Amazon Web Service (AWS), Facebook, Google, and Microsoft are developing their own customized server infrastructure with the help of the Open Compute Project (OCP) to improve the performance of data center facilities. For instance, in 2021, Microsoft launched Project Olympus to innovative cloud hardware designs with the help of OCP.
• Due to edge data centers and growing BFSI sectors, the microserver market is expected to grow during the forecast period. The countries such as Dell Technologies, IBM, and HPE are the prominent players offering microservers in the market.

Rack servers still dominate whereas blade server procurement will be driven by workload requirements

• The data center blade servers are adapted to fulfill the requirement of the data center operators, that is minimum space with high power density.

India will witness the highest growth over the forecast period, growing at a CAGR of around 13.26%.

• North America had the highest data center server market share of around 45% worldwide, followed by APAC and Western Europe, in 2021.
• In APAC, India is emerging as a key market whereas, China & Hong has the highest market share, contributing around 65%, followed by Japan. Post COVID-19, the industry faced supply chain shortages; many Chinese companies as producing their own chips and servers. For instance, Alibaba announced a new 5nm ARM-based server chip for its data centers.
• In the Nordics, the demand for ARM-based servers is likely to increase, as the region is dominated by high-performance computing solutions in the facilities.

VENDOR ANALYSIS

• The vendors are continuously innovating by introducing advanced server infrastructure for data center facilities. Hewlett Packard Enterprise (HPE) is leading the market, followed by Dell Technologies and Intel, in the data center server market.
• The vendors are collaborating with operators to provide and innovate liquid cooling solutions. For instance, Iceotope Technologies and Hewlett Packard Enterprise (HPE) have signed an OEM agreement to provide liquid cooling solutions for edge data centers.
• The data center operators are also deploying servers with x86 and x64 processors along with ARM-based servers. Datacenter operators are deploying servers in a collaboration with vendors. For instance, in April 2021, Microsoft partnered with Wiwynn in its Washington data center to test the deployment of two-phase immersion-cooled servers.

KEY INDUSTRY PLAYERS

• Dell Technologies
• Hewlett Packard Enterprise (HPE)
• Advanced Micro Devices (AMD)
• Intel
• Lenovo

REPORT COVERAGE: 

• Spending on server infrastructure and potential growth opportunities 
• Key trends impacting server procurement across data centers worldwide 
• Server Adoption pattern and growth opportunity across industry verticals 
• Server Procurement by form factor (Rack, Blade, & Micro Servers) 
• Geographical Market Analysis Across 8 regions and 20 Countries 
• 20+ Market Participant profiles