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How the Data Center Technology Market Is Faring in the Pandemic

July 23, 2020

Over the recent years, the largest commercial data center operators oriented much of their business around serving cloud platforms, both hyperscale and the so-called “tier-two” and “tier-three” cloud providers. The latter two are categories for smaller cloud companies that compete with the public cloud giants by specializing in serving specific industry verticals or by building out rich sets of services to make cloud easier to consume for traditional enterprises that don’t have great technical capabilities inhouse.

The pandemic-induced acceleration of cloud adoption is expected to only drive more growth for cloud providers across the board. The big American “traditional” IT vendors lost much of the hyperscale hardware market to Asian contract manufacturers years ago. And while they still own the lower-tier cloud-provider market, traditional enterprises are responsible for the bulk of their data center revenue. And enterprises are either shifting spend from on-prem data centers to the cloud or planning to shift it – while holding tight to their cash for the time being.

Data Center Spend Shifts Along with the Workloads
The COVID-19 crisis will drive up demand for everything from IT hardware and software to power and cooling infrastructure gear for cloud service provider data centers, according to the market research firm Omdia, which recently put out its assessment of the headwinds and the tailwinds the data center industry should expect from the crisis. Telco data centers will see a lot of the same. Meanwhile, demand by enterprise data centers will be down substantially for the next six months to two years, Omdia projected.

(Disclaimer: Omdia and DCK are sister brands under the Informa Tech umbrella. Be sure to visit Omdia’s dedicated page for free resources the analysts are offering to help practitioners and vendors deal with the challenges presented by the pandemic.)