Malaysia to grow at 7.6 per cent CAGR over 2020-2025
The overall addressable market for enterprise servers in Malaysia is expected to grow at a CAGR of 7.6 per centbetween 2020-2025, driven by the ongoing expansion of data center capabilities by leading vendors coupled with high-speed computing by the enterprises, forecasts GlobalData, a leading data and analytics company.
Sunil Kumar Verma, Lead ICT Analyst at GlobalData, comments: “Server infrastructure adoption will strongly be driven by the increase in data center investments, owing to the rapid pace of digitalization, focus on data locality and surge in high-speed computation requirements.”
The five-year Digital Investments Future5 (DIF5) Strategy (2021-2025) of Malaysia Digital Economy Corporation (MDEC) focuses on investments and advancements of Malaysia’s digital economy in line with the Malaysia Digital Economy Blueprint or MyDIGITAL, which lays emphasis on investments in five key tech areas: Artificial Intelligence, Cloud Computing, Cybersecurity, Data Centers and digital content tools. Thus, providing impetus for enterprise spending on advanced compute infrastructure.
Additionally, the focus on five emerging technologies namely Blockchain, DroneTech, Edge computing, extended reality, and advanced robotics will further provide vendors with revenue potential in the enterprise server market.
Out of the two major components- hardware and managed server services, the overall spending on managed server services is set to grow at a CAGR of 9.9 per cent over 2020-2025.
However, server hardware will continue to account for more than four-fifths of the revenue opportunity throughout the forecast period. Low-end servers will account for majority share of the overall hardware segment, followed by mid-range and high-end servers respectively, owing to the increased adoption amongst startups and small and mid-size enterprises (SMEs) due to the cost-benefit scenario.
Verma concludes: “The large enterprise segment (1,000+ employee) will account for nearly more than 50 per cent of the overall server spending during the forecast period. The spending of the micro (1-50 employees), small (51-250 employees) and medium (251-1000 employees) enterprises will account for nearly 46 per cent of the overall enterprise server spending during the same period. With enterprises focussing on IT infrastructure updating to leverage high-performing computing servers owing to growth of IOT, cloud computing, virtualization, the demand for servers across all verticals is expected to grow as enterprises need to handle large data volumes, which requires high processing speeds.”
Enterprise server spending in Singapore to increase at 6.4 per cent CAGR over 2020-2025
The total addressable market size of servers in Singapore, in terms of enterprise spending opportunity, is poised to grow at a CAGR of 6.4 per cent to reach $US1.5bn in 2025 mainly driven by the ongoing digital transformation and IT modernization efforts of enterprises, says GlobalData, a leading data and analytics company.
According to GlobalData ‘Market Opportunity Forecasts – ICT in Singapore’, enterprise server spending will be driven by the need for enterprises to invest in a robust compute infrastructure that can power their data intensive workloads including AI, IoT, Big Data & Data Analytics implementations to improve the overall services and efficiency.”
Saurabh Daga, Technology Analyst at GlobalData, comments: “Enterprises across the globe, including Singapore, are increasingly adopting cloud-based IT infrastructure to support their ongoing digital implementations such as remote working enablement, and adoption of online/ecommerce services, which will also help drive the demand for servers not just from public cloud services but also for private cloud and traditional IT deployments.
Despite the government’s temporary moratorium on new data center permissions, Singapore will continue to remain the most sought-after location for data center buildouts with companies like Equinix, Tencent Cloud, and Digital Reality expressing their interest in setting up new data centers once the moratorium is lifted. This will additionally help boost data center server spending in the country over the forecast period.
Among the enterprise server segments comprising server hardware and managed services, the former will account for the largest share of the overall enterprise server spending opportunity through the forecast period. Within the hardware segment, low-end servers will contribute largest share of the total market value followed by mid-range and high-end servers. The low-end servers market mainly benefits from huge demand for low cost, volume servers, especially single socket server configurations that are energy efficient and can be deployed in external locations and limited spaces such as in edge data centers.
Daga adds: “Enterprise spending on managed server services will grow at a healthy CAGR of 8.5 per cent over the forecast period. The need for enterprises to keep their IT spending in check as they emerge out of the COVID-19 slowdown will prompt them to consider third-party management of their server environment. Additionally, growing complexity of deploying and managing advanced server infrastructure in-house is also likely to encourage enterprises to choose managed service providers.”
While the large enterprise segment (1,001+ employees) will account for the largest share of the total enterprise server spending in Singapore through the forecast period, the combined spending from micro (1-50 employees), small (51-250 employees) and medium (251-1,000 employees) enterprises will increase at a marginally faster CAGR of 6.5 per cent over the forecast period.
Daga concludes: “Much of the spending growth in the Micro, Small and Medium Enterprises (MSME) is driven by acceleration in the adoption of digital technologies by small and medium businesses in the aftermath of COVID-19, requiring improved compute infrastructure and also by Singapore GovTech Agency’s policy of sourcing majority of the government ICT contracts through small & medium businesses.”
