Low-end servers to be the major revenue contributor in APAC server market, GlobalData

The Asia-Pacific (APAC) region has emerged as the preferred outsourcing destination for the global enterprises. Amidst this background, low-end servers and China, backed by the presence of regional server giants, will dominate the APAC server market through 2023, says GlobalData, a leading data and analytics company.

According to GlobalData’s Market Opportunity Forecasts Model, China will continue to be the largest country accounting for nearly 36% of the overall server revenue in the region, followed by Japan with 24% in 2023.

Though the mid-range servers is expected to witness the highest compound annual growth rate (CAGR) of 11.1%, it is the low-end servers which will be the prime revenue contributor, accounting for more than three-fifths of the overall server revenue each year, during the forecast period (2018-2023)..

Sunil Kumar Verma, Lead ICT Analyst at GlobalData, comments, “The low-end servers cater to the requirements of startups and small and mid-size enterprises (SMEs), which are often bound by cost-constraints.”

Growth in the manufacturing, construction and banking sectors will drive the overall server revenue growth both in China as well as Japan. In China, regional vendors such as Lenovo, Huawei and Inspur continue to grow relatively faster than their western counterparts like IBM, Dell and HPE, as the government encourages domestic players.

Sunil explains, “The growth in the data center market facilitated by telcos like China Telecom, China Unicom and other regional companies has led to the preferred adoption of products from the domestic companies.”

Mid-range server revenue will witness the fastest growth, owing to the technological enhancement requirements by enterprises, as they look to support the requirements for next-generation technologies. Growth might be impacted by the conservative approach of startups and SMEs in terms of capital expenditure (CapEx) spending patterns for new purchases. Increased computational requirements will in turn motivate them to upgrade to richer configurations and new platforms, resulting in the growth of mid-range servers.

Sunil concludes, “The enterprises continue to keep pace with technological changes and the importance to be connected with advanced hardware and software. The growth in cloud computing, streaming services and other data-intensive functions by mid and large enterprises will spur the demand for hyper-configured servers.”