Covid-19 has depressed demand for servers and data storage from transportation, hospitality and physical retail operation. At the same the pandemic has increased demand for video streaming, web conferencing and online retail, according to the tech analyst firm IDC.
Server and external storage sales will fall in the first half of the year, but shipments should grow again, fuelled by cloud provider demand, IDC said.
Kuba Stolarski, research director, IT infrastructure at IDC, said in a statement: “The impact of covid-19 will certainly dampen overall spending on IT infrastructure as companies temporarily shut down and employees are laid off or furloughed.
“While IDC believes that the short-term impact will be significant, unless the crisis spirals further out of control, it is likely that this will not impact the markets past 2021, at which point we will see a robust recovery with cloud platforms very much leading the way.”
A tale of two sub-markets
IDC has modelled pessimistic, optimistic and middle ground scenarios for the server and storage markets.
The middle-ground, more likely option is based on a depressed Chinese market spreading to other regions before abating towards the end of 2020.
This scenario sees server sales dropping 11 per cent y-on-y this quarter and 8.9 per cent in Q2. But then sales will rise again as cloud service providers buy more servers to meet rising demand for their services. Overall, IDC’s analysts see server sales in 2020 declining 3.4 per cent from 2019 to $88.6bn.
External storage sales, such as SANs, filers and object stores, will slump 7.3 per cent this quarter and 12.4 per cent in Q2. There will be slight growth by the end of 2020, giving an overall decline of 5.5 per cent to $28.7bn compared to 2019.
According to IDC the IT Infrastructure market has two sub-markets moving in different directions: decreasing demand from enterprise buyers and increasing demand from cloud service providers. The external storage systems market, with a higher share of enterprise buyers, will experience a deeper decline than the server market in 2020
Cloud service providers do not buy external storage systems, but they do buy SSDs and disk drives. IDC doesn’t predict how this might affect overall SSD and disk drive sales. It does predict that the storage market will return to growth in 2021.