South Korea, China and Australia increase server spending.
The total addressable market size of servers in South Korea, in terms of enterprise spending opportunity, is poised to grow at a compound annual growth rate (CAGR) of 5 per cent between 2020 and 2025, driven by the acceleration in digital transformation initiatives among enterprises in the country, and the subsequent rise in their demand for high computing power, says GlobalData, a leading data and analytics company.
GlobalData Market Opportunity Forecasts to 2025: ICT in South Korea reveals that rising adoption of disruptive technologies like artificial intelligence, IoT, and big data as a part of their digital transformation efforts to improve operational efficiencies, enhance services and gain competitive advantage, is also encouraging enterprises to upgrade their technology infrastructure, including servers to support such workloads.
Saurabh Daga, Technology Analyst at GlobalData, comments: “Several enterprises in the country are accelerating their remote working, online service, cloud computing and e-commerce strategies to emerge stronger from the COVID-19 inflicted disruptions and are hence upgrading their compute and storage infrastructure to support these implementations. This will help enterprise server spending in South Korea to grow from $US1bn in 2020 to $US1.3bn in 2025.”
KT Corp, for instance, launched a new Internet data center in southwestern Seoul in May 2021. LG Uplus Corp. is investing KRW318.1bn ($US267.63m) to build a new Internet data center by the end of 2023. In July 2021, Digital Reality, a global provider of cloud and carrier-neutral data center and interconnection solutions, announced that it would build its second data center (64MW) in South Korea, scheduled for delivery in Q1-2023. The company is already engaged in the construction of its first data center, which is expected to go online in Q4-2021.
Among all the server hardware segments, low-end servers will account for the largest share of total revenue opportunity through the forecast period 2020-2025 due to their low-cost performance benefits. Enterprise spending on mid-range servers, on the other hand, is set to grow at the fastest CAGR of 8.1 per cent over the forecast period.
Daga concludes: “While the large (1,001-4,999 employees) & very large (5,000+ employees) enterprise segments will jointly account for largest share of the total server spending in South Korea through the forecast period, the combined spending from micro (1-50 employees), small (51-250 employees) and medium (251-1000 employees) enterprises will increase at a marginally faster CAGR of 5.1 per cent over the forecast period.
“The ICT ministry’s technology support for small & medium enterprises (SME), and The Ministry of SMEs and Startups’ KRW1.5 trillion ($US1.4bn) investment in startups will especially drive growth of this segment.”
Enterprise storage spending in China to reach $US15.7bn in 2025
The total addressable market size of enterprise storage in China, in terms of spending opportunity, is poised to reach $US15.7bn in 2025, driven by the growing demand for secured, enhanced and faster storage solutions among the enterprises shifting towards digital infrastructure, says GlobalData, a leading data and analytics company.
GlobalData Market Opportunity Forecasts to 2025: ICT in China reveals that innovations in storage solutions such as software-defined storage, high performance capabilities, and faster access to data that can handle next-generation workloads for big data, artificial intelligence and virtual infrastructure will boost enterprise storage market in the country over the next few years.
Saurabh Daga, Technology Analyst at GlobalData, comments: “As enterprises increase their investments in disruptive technologies like big data, artificial intelligence, automation and blockchain as part of their digital transformation initiatives, the need for storage power necessary to capture huge data sets will increase going forward, helping drive enterprise storage spending in China to increase at a CAGR of 9.9 per cent over the forecast period 2020-2025.”
China has emphasised on digital infrastructure spending within its ‘New Infrastructure Plan’, a five-year plan for accelerating the implementation of key technologies, which also includes 5G networks, industrial Internet, data centers, and artificial intelligence, all of which require a significant investment on upgrading the storage infrastructure.
Among the enterprise storage segments comprising hardware, software and managed storage services, enterprise spending on storage hardware is set to grow at the fastest CAGR of 11.7 per cent over 2020-2025. Network attached storage (NAS), all flash and hybrid arrays, and storage area network (SAN) represent the top-three enterprise storage hardware categories in 2021, in terms of market size.
Daga continues: “With phasing out of legacy tape storage, and capability maturation of hard-disk drives, the NAS storage is witnessing a surge in demand as it provides an efficient and scalable storage access for a distributed team from a centralized location. The growing popularity of NAS storage among the Chinese enterprises is also because the data access can be centrally controlled, a key feature considering the strict data security regulations in the country.”
Software-defined storage will account for second largest share of the overall enterprise storage opportunity through the forecast period. The need for simplified, scalable, and cost-efficient storage infrastructure will drive the demand for software-defined storage among the enterprises in China.
Daga concludes: “While the large enterprises segment (1,001+ employees) will account for largest share of the total enterprise storage spending in China through the forecast period, the combined spending from micro (1-50 employees), small and medium (51-1,000 employees) enterprises will increase at a marginally faster CAGR of 9.9 per cent over the forecast period. The increasing trend of digitalization among SMEs in China and the institutional support to them in the form of easy loans and tax incentives on technology implementations and R&D will be the key drivers for growth in this segment.”
Enterprise server spending in Australia to increase at 6.3 per cent CAGR over 2020-2025
The total addressable market size of enterprise servers in Australia, in terms of spending opportunity, is poised grow at a compound annual growth rate (CAGR) of 6.3 per cent to reach $US1.3bn in 2025, led by the ongoing enterprise digital transformation initiatives and IT modernization efforts, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, GlobalData Market Opportunity Forecasts to 2025: ICT in Australia, reveals that Australian enterprises are increasingly adopting cloud-based IT infrastructure to support their ongoing digital transformation initiatives, including remote working enablement, and adoption of online/ecommerce services, which will also help drive the demand for servers not just for public cloud services but also for private cloud and traditional IT deployments.
Saurabh Daga, Technology Analyst at GlobalData, comments: “Growing adoption of disruptive technologies such as AI, IoT and big data and analytics by enterprises to improve their operational efficiency and enhance their digital services will necessitate investments in robust compute infrastructure that can support such workloads between 2020 and 2025.”
Data centre capacity expansions seen in recent times will additionally support the country’s server’s market. In May 2021, DCI Data Centres announced plans for setting up of a new facility in South Australia. Similarly, in July 2021, Macquarie Telecom announced a new data centre in New South Wales, serving corporate as well as government customers.
Australia’s focus on digital technologies as key enablers of post-COVID-19 economic recovery also augurs well for the server market in the country. In September 2020, Australia announced AUD1.2bn ($US868m) Digital Economy Strategy, aimed at making Australia a leading digital economy by 2020. The ‘Digital Economy Strategy’ will not only boost the adoption of digital technologies such as cloud, 5G, blockchain etc. in the country but also stimulate the demand for key IT infrastructure components such as servers and storage.
Among the enterprise server segments comprising hardware, and managed server services, enterprise spending on managed server services is set to grow at a faster CAGR of 8.4 per cent over 2020-2025.
Daga adds: “While most enterprises in Australia have come out of the COVID-19 induced slowdown, the need to keep their IT spending in check 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”
Server hardware 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 respectively.
Daga concludes: “While the large enterprise segment (1,001+ employees) will account for largest share of the total enterprise server spending in Australia through the forecast period, the combined spending of micro (1-50 employees), small (51-250 employees) and medium (251-1,000 employees) enterprises will increase at a marginally faster CAGR of 6.4 per cent over the forecast period. The federal budget’s provisions for setting up of National AI Center and 4 AI and Digital Capability Centers to accelerate the adoption of transformative digital technologies among SMEs will be the key driver for growth of server spending in this segment.”