Server Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented by Processor Type (X86 Servers, ARM Servers, SPARC Servers, Power Servers), By Type of Server (Rack Servers, Blade Servers, Tower Servers, Micro Servers, Mainframe Servers), By End-User Industry (Healthcare, IT and Telecom, Hospitality, Retail, Manufacturing), By Region, By Competition, 2018-2028
Published Date: November - 2024 | Publisher: MIR | No of Pages: 320 | Industry: ICT | Format: Report available in PDF / Excel Format
View Details Buy Now 2890 Download Sample Ask for Discount Request CustomizationServer Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented by Processor Type (X86 Servers, ARM Servers, SPARC Servers, Power Servers), By Type of Server (Rack Servers, Blade Servers, Tower Servers, Micro Servers, Mainframe Servers), By End-User Industry (Healthcare, IT and Telecom, Hospitality, Retail, Manufacturing), By Region, By Competition, 2018-2028
| Forecast Period | 2024-2028 |
| Market Size (2022) | USD 89.68 billion |
| CAGR (2023-2028) | 9.42% |
| Fastest Growing Segment | Blade Servers |
| Largest Market | North America |
Market Overview
Key Market Drivers
Digital Transformation Initiatives Fueling Server Market Growth
In today's fast-paced business landscape, digital transformation has emerged as a critical driver of growth for the global server market. Organizations across industries are actively investing in modernizing their IT infrastructure to adapt to the demands of the digital age. This transformation involves the adoption of cloud services, data analytics, AI, and IoT applications, all of which heavily rely on robust server infrastructure.
Businesses are seeking servers that can deliver high processing power, scalability, and reliability to support these digital initiatives. As a result, server manufacturers are continually innovating to meet these evolving needs, producing servers optimized for cloud-native applications, virtualization, and hybrid cloud environments. The server market is poised to benefit significantly from this ongoing digital transformation trend as organizations upgrade their IT capabilities to remain competitive in the digital era.
Exponential Data Growth and Big Data Analytics Driving Server Demand
The explosive growth of data in today's world is another major driver propelling the global server market. Businesses are collecting and analyzing vast amounts of data to gain insights, make data-driven decisions, and enhance customer experiences. Big data analytics, machine learning, and AI applications require powerful servers with high computational capabilities.
This surge in data has led to the establishment of large-scale data centers, both on-premises and in the cloud, resulting in increased server demand. In particular, hyperscale data center operators are investing heavily in servers to handle the massive data workloads generated by web services, social media platforms, e-commerce, and more. Additionally, enterprises are adopting edge computing to process data closer to the source, creating opportunities for edge server deployment.
Rapid Cloud Adoption and Data Center Expansion Propelling Server Sales
Cloud computing has become a dominant force in the IT landscape, and this trend is significantly driving the global server market. Both public and private cloud deployments require a robust infrastructure comprising servers, storage, and networking equipment. As businesses increasingly migrate their workloads to the cloud, the demand for servers in data centers is soaring.
Cloud service providers (CSPs) such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are continually expanding their data center footprints to accommodate growing customer demands. This expansion includes significant investments in servers to ensure high availability, scalability, and performance for cloud services.
Moreover, the hybrid cloud model, which combines on-premises infrastructure with cloud resources, is gaining traction. This approach necessitates compatible server solutions that can seamlessly integrate with cloud environments, driving further server sales.
Key Market Challenges
Supply Chain Disruptions and Component Shortages Hampering Server Market Growth
The global server market faces a significant challenge in the form of supply chain disruptions and component shortages. These disruptions have been exacerbated by a combination of factors, including the COVID-19 pandemic, geopolitical tensions, and natural disasters. As a result, server manufacturers are struggling to secure the necessary components, leading to delays in production and increased costs.
One of the critical components affected by shortages is semiconductors, including CPUs and memory chips, which are integral to server manufacturing. The semiconductor industry has experienced supply constraints, impacting the ability of server vendors to meet customer demands. These shortages have caused lead times to extend and have forced some companies to delay server deployments or seek alternative solutions.
Furthermore, the server market relies on a global supply chain, with components sourced from various regions. Geopolitical tensions, trade restrictions, and tariffs have disrupted the flow of these components, contributing to uncertainty in the market. Server manufacturers are actively diversifying their supply chains and exploring local sourcing options to mitigate these challenges, but the situation remains complex.
Server vendors are also faced with the challenge of managing increased costs due to supply chain disruptions, which may ultimately affect pricing and profit margins. As the server market grapples with these challenges, it will be essential for manufacturers to maintain flexibility, resilience, and adaptability in their supply chain strategies to meet customer demands and navigate the evolving landscape.
Rising Environmental Concerns and Energy Efficiency Expectations Impacting Server Design
Environmental sustainability has become a pressing concern globally, and it presents a challenge to the server market in terms of server design and energy efficiency. Data centers, which house a significant portion of the world's servers, consume substantial amounts of electricity, contributing to carbon emissions and environmental impact. As a result, there is growing pressure on server manufacturers to produce energy-efficient solutions.
The challenge lies in striking a balance between server performance and energy consumption. Customers increasingly expect servers that can deliver high processing power while minimizing their carbon footprint. This requires innovations in server design, including more efficient power supplies, cooling systems, and advanced management features.
Regulatory bodies and industry standards organizations are also playing a role in shaping the server market's response to environmental concerns. Energy efficiency certifications and guidelines, such as ENERGY STAR for Servers, are becoming more prevalent, and compliance with these standards is a competitive advantage for server manufacturers.
Server vendors must invest in research and development to create servers that not only meet performance demands but also align with sustainability goals. This challenge presents an opportunity for innovation, as manufacturers explore technologies like liquid cooling, renewable energy integration, and improved server management software to enhance energy efficiency.
In conclusion, the global server market faces challenges related to supply chain disruptions and the need for increased energy efficiency. Addressing these challenges will require agility, strategic planning, and a commitment to sustainability in server design and production. Overcoming these obstacles will be crucial for the server market to continue its growth and meet the evolving demands of customers and regulators.
Key Market Trends
Increased Adoption of Cloud Computing
The adoption of cloud computing continues to grow significantly worldwide. More organizations are moving their infrastructure and applications to the cloud to gain efficiencies, scalability, and reduce upfront IT costs. As cloud adoption increases, there is greater demand for powerful and efficient servers that can support cloud workloads. Leading cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud are investing heavily in expanding their data center infrastructure around the world to meet this demand. They are deploying thousands of servers to power their cloud platforms. As businesses increasingly leverage cloud-based solutions like SaaS applications, infrastructure as a service (IaaS), and platform as a service (PaaS), it is driving the need for high-performance servers optimized for cloud and virtualized environments. Server manufacturers are developing servers with the latest processors, memory, storage, and networking technologies specifically designed for private and public cloud infrastructure.
Rise of Hyperscale Data Centers
Hyperscale data centers that can support tens of thousands of servers are becoming more prevalent to power large cloud platforms and internet companies. Hyperscale data center deployments allow cloud providers and internet giants to achieve significant economies of scale. They build centralized mega data centers that provide infrastructure and services in a highly efficient manner. The development of hyperscale data centers is fueling demand for servers that can be densely packed while still providing high-performance and reliability. Server manufacturers are designing servers with 2U, 1U, and even smaller form factors that can be stacked in racks more densely. They are also developing servers with improved cooling, power, and management capabilities optimized for hyperscale environments. As more cloud providers, internet companies, and even enterprises establish their own hyperscale data centers, it will drive the need for high-density, scalable servers.
Rise of Edge Computing
Edge computing is emerging as an important architecture for deploying applications and processing data closer to the source of data generation at the network edge. With the proliferation of IoT devices, edge computing helps address the challenges of latency, bandwidth constraints, and the massive data volumes generated at the edge. It allows for real-time processing and analytics of data where it is collected before transmitting it to centralized cloud data centers. Many industries like manufacturing, oil and gas, healthcare, retail and more are implementing edge computing strategies. This is driving demand for compact and rugged servers or server modules that can be deployed in non-traditional environments outside the traditional data center like industrial sites, retail retailers, cell towers etc. Edge server solutions need to be optimized for smaller footprints, lower power consumption and reliability under harsh field conditions. Server manufacturers are developing new form factors like microservers and edge servers to address this growing edge infrastructure market.
Segmental Insights
Processor Type Insights
The global server market in 2022 was dominated by x86 servers which held the largest market share compared to other processor types such as ARM, SPARC and Power servers. X86 servers accounted for over 80% of the server market last year owing to their widespread adoption across industries for applications ranging from web hosting, cloud computing and enterprise infrastructure. Major server manufacturers such as Dell, HPE and Lenovo offered a wide range of x86 server solutions powered by Intel and AMD processors to cater to the varying compute and storage needs of organizations. The second largest segment was ARM servers which saw an increase in market share driven by growing adoption in web infrastructure and network functions virtualization. Companies like Amazon, Google and Microsoft deployed ARM-based servers for their cloud and data center workloads given the energy efficiency of ARM architecture. However, ARM servers still accounted for less than 5% of the overall server market. The remaining share was captured by niche server architectures like SPARC and Power which were primarily used by vendors like Oracle, Fujitsu and IBM for their proprietary solutions. While x86 servers are expected to continue dominating the server market over the next five years, ARM servers are anticipated to grow at a faster pace and potentially capture a double-digit share by 2027 as they increasingly replace x86 servers in low-power environments.
Type of Server Insights
The global server market in 2022 was dominated by x86 servers which held the largest market share compared to other processor types such as ARM, SPARC and Power servers. X86 servers accounted for over 80% of the server market last year owing to their widespread adoption across industries for applications ranging from web hosting, cloud computing and enterprise infrastructure. Major server manufacturers such as Dell, HPE and Lenovo offered a wide range of x86 server solutions powered by Intel and AMD processors to cater to the varying compute and storage needs of organizations. The second largest segment was ARM servers which saw an increase in market share driven by growing adoption in web infrastructure and network functions virtualization. Companies like Amazon, Google and Microsoft deployed ARM-based servers for their cloud and data center workloads given the energy efficiency of ARM architecture. However, ARM servers still accounted for less than 5% of the overall server market. The remaining share was captured by niche server architectures like SPARC and Power which were primarily used by vendors like Oracle, Fujitsu and IBM for their proprietary solutions. While x86 servers are expected to continue dominating the server market over the next five years, ARM servers are anticipated to grow at a faster pace and potentially capture a double-digit share by 2027 as they increasingly replace x86 servers in low-power environments..
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Regional Insights
North America dominated the global server market in 2022 with a market share of over 35%. The region is expected to maintain its dominance during the forecast period from 2023 to 2027. The United States accounts for the bulk of the North American server market due to the strong presence of leading server manufacturers such as Hewlett Packard Enterprise, Dell Technologies, IBM, Cisco, and Lenovo in the country. These companies have been investing heavily in research and development to develop advanced servers with improved performance, efficiency, and security capabilities. This has helped them strengthen their market position and cater to the growing demand from enterprises across industries for powerful and reliable servers. Additionally, a large number of data centers are located in the United States to support the ever-increasing data processing and storage needs of organizations. The demand for servers is also driven by the rising adoption of advanced technologies like cloud computing, big data analytics, artificial intelligence, and 5G networks in North America. The government initiatives to develop smart infrastructure are further fueling the deployment of servers. While the COVID-19 pandemic impacted the server market initially, it has picked up pace again as more companies shifted to remote working and digital transformation initiatives. All these factors are expected to ensure that North America remains the dominant region in the global server market during the forecast period.
Recent Developments
- DellTechnologies announced plans in 2022 to spin off its 81% stake in VMware, amove aimed at simplifying Dell's structure and reducing debt. The spinoff isexpected to be completed by late 2023.
- In2022, Intel launched its 3rd generation Intel Xeon Scalable processors,code-named Sapphire Rapids. These new server CPUs feature enhanced performanceand security capabilities.
- HewlettPackard Enterprise acquired supercomputer maker Cray in 2019 for $1.3 billion,expanding its high-performance computing portfolio. In 2022, HPE launched itsHPE GreenLake edge-to-cloud platform.
- Lenovoreported strong server revenue growth in 2022, driven by demand for x86 serversand high-performance computing systems. Lenovo aims to expand in the servermarket with its Neptune liquid cooling technology.
- AmazonWeb Services continues to grow its infrastructure footprint and added newregions in cities like Mumbai and Milan in late 2022. AWS remains the dominantplayer in cloud computing and infrastructure services.
- Inspurlaunched its X10000 liquid cooling server series in 2022, targetinghigh-performance computing workloads. Inspur is one of the largest servermanufacturers in China.
Key Market Players
- DellTechnologies Inc
- HewlettPackard Enterprise Development LP
- LenovoGroup Limited
- InspurInformation
- CiscoSystems Inc.
- HuaweiTechnologies Co. Ltd.
- Inspur
- Oracle Corporation.
- Fujitsu
- Super MicroComputer Inc.
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