Silver lining predicted for IT infrastructure markets amid COVID-19
- 30 March, 2020 13:30
Spending on server and enterprise storage systems is likely to decline amid the COVID-19 pandemic, but long-term growth may still be on the horizon.
As the situation stands currently, 3.4 per cent declines to U.S.$88.6 billion are predicted for server market revenues in 2020.
At the same time, enterprise storage systems (ESS) market revenues are set to fall by 5.5 per cent to U.S.$28.7 billion this year, according to IDC's Worldwide Quarterly Server Tracker and Worldwide Quarterly Enterprise Storage Systems Tracker.
The bulk of the declines will hit the first two quarters of the year, with the server market falling 11 per cent in Q1 and 8.9 per cent in Q2.
Meanwhile, the ESS market is expected to decline 7.3 per cent in Q1 and 12.4 per cent in Q2.
The probable scenario's assumption is that COVID-19 will negatively impact China in the first quarter of 2020 through changes in demand expectations, supply chain shortages, logistical delays, short-term component price increases and suppressed economic and social climates.
This will then spread to other regions from the second quarter, but will slow by the end of the year.
Kuba Stolarski, research director of IT infrastructure at IDC, added that spending is also expected to reduce due to businesses temporarily closing their doors and employees losing their jobs.
Both markets are then forecast to return to growth by the end of the year, with the ESS market expecting further growth in 2021, according to Stolarski.
"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," Stolarski said.
Looking further ahead, the compound annual growth rate (CAGR) from 2019 to 2024 is also expected to grow, with the server market growing by 4.9 per cent to U.S.$116.6 billion in 2024 and the external ESS market growing by 1.3 per cent to U.S.$32.4 billion during the same period.
IDC also noted a spike in demand for cloud services for compute and storage needs, resulting in demand for servers and system components.
This is splitting the market in two directions according to IDC — decreasing demand from enterprise buyers and increasing demand from cloud service markets.