The current covid-19 pandemic will lead to a downward trend in end-user spending on IT infrastructure, including servers and enterprise storage systems, in 2020.
From IDC's Quarterly Tracker of Global Servers and Enterprise Storage Systems, server market revenue will decline 3.4 percent year-over-year to $88.6 billion, while external enterprise storage system revenue will decline 5.5 percent to $28.7 billion.
On a quarterly basis, IDC predicts that the server market will decline 11.0 percent in the first quarter and 8.9 percent in the second quarter before gradually resuming growth in the second half of the year.
The external enterprise storage systems market will decline 7.3 percent in the first quarter and 12.4 percent in the second quarter before resuming modest growth by the end of 2020 and is expected to recover further in 2021.
IDC has set three prediction scenarios for the impact of the new crown virus on the IT infrastructure market – optimistic, likely and pessimistic.
The likely scenario is that the broad negative impact will start in China, gradually spread to the rest of the world, and begin to slow down by the end of the year.
Influencing factors include changes in various IT buyer demand expectations, supply chain shortages, logistics delays, short-term component price increases, economic and social climates are suppressed, and more.
The current forecast is based on the likely scenario as of March 26, 2020, but further adjustments are likely to be made as the situation continues.
As the first country to be infected by the coronavirus, China was the most negatively affected in the first quarter of 2020, while other regions will see the impact from the second quarter.
From an industry perspective, industries such as transportation, hospitality, and retail are facing reduced consumer activity and business impact, while other industries are seeing a sudden increase in demand for services such as video streaming, web conferencing, and online retail.
Faced with economic uncertainty, many businesses are forced to consider adopting cloud services faster to meet their compute and storage needs.
This surge in demand has put unexpectedly heavy pressure on the IT infrastructure of cloud service providers' data centers, resulting in an increasing demand for servers and system components from providers.
As a result, the IT infrastructure market has become two sub-markets that are moving in different directions: less demand from enterprise buyers and more demand from cloud service providers.
This change has the biggest impact on the server market, and the entire server market will decline slightly in 2020. The external storage system market, which has a higher share of enterprise buyers, will decline even more sharply in 2020.
*Note: The Storage Extensions class includes OEM and ODM storage extensions.
Kuba Stolarski, director of IT infrastructure research at IDC, said: "Due to business shutdowns, employee dismissals or vacations, the coronavirus will definitely weaken overall IT infrastructure spending. ”
"IDC believes that while the short-term impact is very large, it will not affect the market beyond 2021 unless the crisis further exacerbates the loss of control, at which time we will see a strong recovery in cloud platforms."
Both markets will return to growth in the long run.
The server market is expected to achieve a CAGR of 4.9% during the 2019-2024 forecast period, with revenue reaching $116.6 billion by 2024.
At the same time, the storage market will grow at a COMPOUND annual growth rate of 1.3% to reach revenue of $32.4 billion by 2024.
Natalya Yezhkova, vice president of IT infrastructure research, said: "The IT infrastructure market has undergone a transformation and changes in end-user spending will accelerate changes in the IT buyer landscape. ”
"While the current crisis has created tensions and uncertainties in the market, it will also prompt organizations to accelerate the adoption of technologies and IT delivery models that help optimize IT infrastructure resources."