What’s Driving Server Market Growth?

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Server Market Growth

In March, IDC released a press release revealing a 1.9% year over year increase in factory revenue in the worldwide server market. The United States experienced 1.0% growth while Asia/Pacific vastly outpaced the rest of the world with a year-over-year increase of 15.8% in 4Q14. Europe, Middle East and Africa (EMEA) and Japan recorded more modest but positive year-over-year growth of 1.2%, 1.5%, respectively.

However, another factor may affect spending – currency fluctuations. After this release, Gartner revised its prediction to a 1.3% shrink in IT spending, mostly due to a strong dollar. It largely depends on whether US technology providers choose to increase their prices to maintain margin or not.

Where does your company fit in – growth or cutbacks?

According to IDC, two distinct market segments are driving the server market:

  1. 2nd platform workloads: This segment is characterized by traditional workloads. The emphasis here is on establishing systems that are richly configured, highly consolidated and still allow for advanced management and automation.
  2. 3rd platform workloads: A relative newcomer, this segment is largely being driven by the increase in demand for cloud services and the growth of cloud-service providers. It targets mainly virtualized environments aiming to build infrastructure capable of handling next generation workloads.

It’s interesting to note that the volume system and midrange segment predominantly drove sales growth with high-end servers sales declining significantly. Although this may indicate a shift in market demand, it’s highly likely to be attributed to a major IBM z Systems upgrade announced in January.

In constant currency terms, the server market is expected to continue to grow. This growth will mainly be due to the IoT. First, an increasing number of IoT applications will generate additional data, network traffic, and demand for real-time analytics.  In turn, this increase in demand will generate new server designs and methods of deploying compute capability.  How much currency fluctuations affect that growth remains to be seen.

Your turn: What applications is your company bringing online soon?  Will you need additional server capability?  If yes, what kind?


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