January 9, 2017

Cloud growth affecting the server market: Reports

The growth rate of the data center server market has slowed nearly as much as 6%

According to a report by GeekWire, along with the growth of cloud computing with companies like Amazon, Microsoft, Google and IBM, there are firms which are negatively affected by this growth.

A new study by Synergy Research Group states that the revenue from sales of data center servers declined nearly 5% year-over-year, affecting market leaders like HPE, Dell EMC, Lenovo, IBM and Cisco, respectively.

John Dinsdale, Chief Analyst at Synergy said:

The trend toward pushing more and more workloads onto the public cloud means that the need for on premises enterprise data centers is constrained or diminished.

The trend toward public cloud companies using their self-designed servers manufactured under contract by original design manufacturers (ODMs) substantially reduces the market opportunity for servers.

But, he added, the impact is strongest not on makers of enterprise servers but on makers of service provider servers.

It was also reported that both Amazon Web Services and Microsoft are moving to manufacture more of their own gear from generic or custom components. The market for data center servers is nearly $32 billion worldwide, but its growth rate has slowed as much as 6 percent in 2016.

Jeremy Duke, Founder and Chief Analyst, Synergy said:

The main disruption to the market is being provided by the growth of cloud and hosted solutions, which are redefining markets and enabling new competitors to emerge.

Synergy also reported that switches and routers, a $27 billion segment led by Cisco and HPE, respectively, grew by only 1% last year. That market is being affected as hardware is being replaced by software and as the public cloud companies are building some of the balance on their own.

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