The coronavirus pandemic will hit the worldwide server and storage market hard this year, causing “significant” short-term impact in the first half of 2020, according to a new report by research firm IDC.
IDC is now predicting that worldwide external enterprise storage revenue will drop 5.5 percent year over year to US$28.7 billion in 2020, while global server sales will decline 3.4 percent to US$88.6 billion.
"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," said Kuba Stolarski, research director of IT Infrastructure at IDC, in a statement. "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."
Breaking down IDC’s server market forecast for 2020, sales of x86 servers will decrease 2.2 percent year over year to US$81.9 billion, while non-x86 revenue is expected to drop 16 percent to US$6.7 billion.
In terms of quarterly impact, IDC expects the server market to decline 11 percent year over year in the first quarter, then approximately 9 percent in the second quarter of 2020. However, IDC expects a return to growth in the second half of the year. On the storage front, IDC is predicting a 7 percent year-over-year decline in global revenue in the first quarter, followed by a 12 percent storage sales drop in the second quarter before returning to slight growth by the end of 2020.
China will see the greatest negative impact in server and storage sales in the first quarter of 2020 while other regions will start to experience the impact in the second quarter, according to IDC.
Many businesses are being forced to consider more cloud services to fulfill their compute and storage needs, which is putting unplanned pressure on the IT infrastructure in cloud service provider data centers and leading to growing demand for servers and system components. As a result, IDC said the IT infrastructure market has two submarkets going in different directions—a decreasing demand from enterprise buyers and increasing demand from cloud service providers. This dynamic is impacting the server market the most, resulting in a moderate decline for the overall market in 2020. The external storage systems market, with a higher share of enterprise buyers, will experience a deeper decline in 2020, according to IDC.
"The IT infrastructure markets are already going through a transformation and shifts in end-user spending will bring an even faster-changing IT buyer landscape," said Natalya Yezhkova, research vice president of IT Infrastructure, in a statement. "While the current crisis brings tensions and uncertainty to the market, it also will push organizations to expedite adoption of technologies and IT delivery models that help with optimization of IT infrastructure resources."
Earlier this month, IDC cut its IT spending forecast for 2020 due to the coronavirus pandemic. The research firm now predicts only 1 percent growth in IT spending this year, compared with its original expectation in January of 5 percent growth year over year.