Monday, 30 March 2020 12:24

Server, biz storage systems markets to decline in 2020: IDC

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Server, biz storage systems markets to decline in 2020: IDC Image by Edgar Oliver from Pixabay

Expenditure by end users on IT infrastructure — server and enterprise storage systems — will decline in 2020 due to the coronavirus pandemic, the global market intelligence firm IDC says.

In a statement, IDC said under its current probable scenario, server market revenues would fall 3.4% year-on-year to US$88.6 billion and revenue for external business storage systems would fall 5.5% to US$28.7 billion.

Three forecast scenarios were developed to model how COVID-19 would hit the IT market, IDC said: optimistic, probable and pessimistic. The probable forecast assumed the pandemic would have a broad negative effect, beginning in China and spreading to other regions before slowing down by year-end.

The company said that the current forecast had been made based on figures on 26 March, adding that things could change further.

As China was the first to be hit by the outbreak, it would see the biggest negative effect in the first quarter of 2020, while other regions would begin to experience negative effects in the second quarter.

IDC pointed out that while some industries — like transportation, hospitality and retail — were seeing downturns, others — like video streaming, Web conferencing, and online retail — were seeing a growth in demand.

"Facing economic uncertainty, many businesses are being forced to consider more expedited adoption of cloud services to fulfil their compute and storage needs," the company said.

"This spike in demand put unplanned pressure on the IT infrastructure in cloud service provider data centres, leading to growing demand for servers and system components."

As a result of this, the company said, the IT Infrastructure market had two submarkets going in different directions: "decreasing demand from enterprise buyers and increasing demand from cloud service providers. This dynamic is impacting the server market the most, resulting in just a moderate decline for the overall market in 2020. The external storage systems market, with a higher share of enterprise buyers, will experience a deeper decline in 2020".

IDC IT Infrastructure Research director Kuba Stolarski said: "The impact of COVID-19 will certainly dampen overall spending on IT infrastructure as companies temporarily shut down and employees are laid off or furloughed.

"While IDC believes that the short-term impact will be significant, unless the crisis spirals further out of control, it is likely that this will not impact the markets past 2021, at which point we will see a robust recovery with cloud platforms very much leading the way."

The server market is expected to deliver a compound annual growth rate (CAGR) of 4.9% over the 2019-2024 forecast period with revenues reaching US$116.6 billion in 2024. Meanwhile the external ESS market would see a five-year CAGR of 1.3% growing to US$32.4 billion in 2024.

"The IT infrastructure markets are already going though a transformation and shifts in end user spending will bring an even faster changing IT buyer landscape," said Natalya Yezhkova, research vice-president, IT Infrastructure.

"While the current crisis brings tensions and uncertainty to the market, it also will push organisations to expedite adoption of technologies and IT delivery models that help with optimisation of IT infrastructure resources."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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