• Global server revenues will grow 17% YoY in 2022 to reach $111.7 billion.
• Global server shipments will rise 6% YoY in 2022 to reach 13.8 million units.

New Delhi, Boston, Toronto, London, Hong Kong, Beijing, Taipei, Seoul – June 7, 2022

The global server market’s revenue will grow 17% YoY in 2022 to reach $111.7 billion, according to Counterpoint’s Global Server Sales Tracker. From an enterprise perspective, transformation to hybrid cloud and upgrades of existing infrastructure to handle increased workloads will provide growth impetus after a pause during the COVID-19 pandemic. 5G, automotive, cloud gaming and high-performance computing will remain the key drivers for cloud service providers in data center expansion.

The market is evolving with the introduction of “As-a-Service” and “pay per use” models by server companies, like Pointnext from HPE, APEX from Dell and TruScale from Lenovo. The business model pivot has been enjoying great success due to more flexibility given to the customer at minimum capital expenses due to the emergence of workload-based infrastructure.

Looking at the overall market, Research Analyst Akshara Bassi said, “In an inflationary but extremely dynamic environment, companies are looking to strengthen their infrastructure as they prepare for Web 3.0 demands from the infrastructure end. Companies are diversifying their IT infrastructure to meet the needs of data evolution and making customers cloud-ready.”

Global Server Market Observations, 2018-2021

• Revenues were flat in 2020 and early 2021 owing to the pandemic and less spending by enterprises on IT infrastructure upgrades and expansion.
• In H2 2021, there was a backlog due to supply chain disruptions across the whole value chain from accelerator chips to power ICs, which has trickled into H1 2022.
• The demand in 2021 picked up due to investments by hyperscalers in the fields of supercomputing, edge computing and 5G deployment. From an enterprise perspective, the upgrades and expansions happened to enable digital transformation along with cloudification of processes.
• The shipments rose at a single digit owing to better attach rates and higher configurations within the servers.
• Higher compute and storage requirements by customers along with supply chain disruptions raised the average unit price considerably for the server units.

Commenting on the server market, Bassi said, “Dell and HPE are the server market icons but are seeing companies like Lenovo, Inspur and Supermicro giving strong competition as demand for flexible customised configurations in bare metal option continues to rise.”

ODM Direct grew at a higher pace by 3 percentage points than the overall market for 2021 indicating shift towards ODM direct as choice of hardware for large scale Data Center deployments. Foxconn and Quanta have been gaining significant market share over the years as hyperscalers continue to expand and favor ODM Direct for their data center orders.

Key Market Drivers, 2022

• Edge servers: Edge server configurations will be a key driver of growth in server shipments as companies start enabling chip-to-cloud features within the devices and 5G deployments make IoT use cases penetrate across all verticals – consumer, industrial, healthcare and banking.
• Metaverse: The infrastructure spends to enable the Metaverse will give an impetus to servers as they are the building blocks of the Metaverse. Major internet corporations and hyperscalers have already detailed their plans for spends on Metaverse infrastructure.
• Supercomputing: Many enterprises are building their own supercomputers to develop software that can unleash Web 3.0 on consumers. From a government perspective, supercomputers are becoming ubiquitous in every research department within it – from being used only in defense initially to climate and healthcare now.
• Cloudification of services: Many services are increasingly becoming cloud-based offerings as opposed to device-based earlier, with device storage and compute needs being taken care of by cloud-based services. Data centers, and thereby servers, are an integral part of the infrastructure needed to enable these services.

Note: ODM Direct constitutes sale to hyperscalers and whitelabel device sales to Enterprises directly.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

 Akshara Bassi

 Dale Gai

 Neil Shah

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