The external OEM enterprise storage systems (ESS) market reported annual growth of 3.6% in the fourth quarter of 2024, completing the year at 2.5% annual growth and $33.5 billion in spending. Despite a recovery cycle after declines in 2023 the spending for the year was just $100 million shy from the level of spending in 2022. The main reasons for the soft performance of the external ESS market at the times of incredibly high growth in spending on servers for building up infrastructure for AI workloads are the allocation of the larger portions of budgets to support the latter and, consequently, continuous growth in deployments of server-based storage to support growing needs of AI workloads.

IDC expects that the recovery of the external ESS market will be pushed into 2025 as the strong growth in investments into computing infrastructure will start slowing down. Positive developments and drivers for growing demand include increasing demand for flash storage (typically, all-flash arrays) to support projects related to artificial intelligence by building more comprehensive data lakes and also growing demand for dedicated infrastructure as a service solutions as companies and service providers are increasingly finding value in repatriating or migrating some of their workloads from shared cloud to dedicated IT environments.