Servers Market Share
Updated: 16 December 2022
Worldwide Server Market Spending Slowing in 2023 but Expected to Continue with a CAGR of 10.2% in a Five-Year Period, According to IDC
Despite concerns about the macroeconomic and geopolitical environment, the server market continued experiencing strong growth in the third quarter of 2022 with 25.0% y/y growth.
The market faces continued challenges through the end of 2022, including remnants of impact from the pandemic, historically high inflation, supply chain disruption and geopolitical conflict. However, the server market has proven very resilient in recent years, as IT infrastructure has evolved from a nice-to-have to a mission critical investment for many organizations. Value forecast for 2023 was lowered to 3.2% annual growth from 6.1% in September’s release.
While the nature of investment and workload choices may be impacted by economic and other pressures, overall, the market is expected to grow every year over the next five years. An aging installed base is primed for refresh, some of this may have already happened through the first three quarters of 2022, although increasingly it appears that more of it may spread into 2023, when new platforms from Intel and AMD will be available. Large cloud service providers will continue their refresh and expansion plans steadily through 2026. An expected digestion phase of excess inventory may be masked by additional investments in new deployment themes such as the metaverse, although there may have been steps taken towards reduction in excess capacity by some hyperscalers already.
Recovery from the COVID-19 pandemic has been uneven across geographies as the impact of the virus and the reactions of governments have been varied. The overall impact of the pandemic seems to be slowly diminishing, but there is a possibility of resurgence in key geographies. For example, recent the Chinese government relaxed some restrictions, which could lead to another wave of pandemic, causing further lockdowns or reduced business functioning due to natural disruptions to the workforce. This can put additional pressure on the supply chain.
The war between Russia and Ukraine continues to impact the market in both direct and indirect ways. In the most direct way, system sales in Russia and Ukraine continued shrinking in 2022Q3 and will continue declining driving the decline in the overall CEE region. Indirectly, the war added to already growing energy prices and transportation costs, which have a rippling impact on the IT industry, especially on regions that historically relied more on energy resources from Russia. Cutting energy supply worsens already declining consumer and business confidence and recessionary pressures.
The macroeconomic environment will continue to be a defining factor for the market performance in the short term. In the longer-term, continuous investments infrastructure modernization, fast-growing workloads like AI/ML, and continued investments in cloud and edge deployments will drive further growth in the market.