Arjuna Kodisinghe - Fotolia
Research firm Gartner has forecast that global IT spending will hit $3.79tn in 2019, an increase of 1.1%. But, in contrast, it has predicted a 2.8% decline in spending on datacentre equipment to $204bn, as a result of expected lower average selling prices (ASPs) in the server market driven by adjustments in the pattern of expected component costs.
According to Gartner’s latest forecast, server spending is set to decline by 1.9%. Enterprises are increasingly making use of public cloud services to deploy workloads, which is leading to a shift in spending patterns: enterprises are buying fewer servers, but public cloud providers are buying more.
“Instead of an enterprise spending $1,000 on a server, cloud providers are buying servers,” said John-David Lovelock, research vice-president at Gartner.
However, since cloud providers tend to buy lower-cost original design manufacturer (ODM) equipment, rather than servers from the likes of HPE, Dell or Lenovo, he said global spending on servers was set to shrink.
As organisations move more workloads to the cloud, Lovelock said he expected the server market to reach an equilibrium. Going forward, revenue growth in server sales is likely to flatten as enterprises stop increasing their on-premise server footprint and public cloud providers increase their capacity using low-cost ODM equipment.
However, Lovelock predicted that the server market would then shift from being largely enterprise-based to growth coming from cloud providers as they buy more datacentre equipment to support increasing demand for consumer-focused online services such as video streaming.
Countries lagging in cloud adoption
Looking at cloud maturity, Lovelock said the US was well ahead of the rest of the world. “It is a large market – almost half of global cloud spending happens in the US,” he said. “If you look at the percentage of total enterprise spend on the cloud, the US is tracking at 14% [annual growth].”
Lovelock said in countries such as Canada, the UK and Australia, enterprise cloud growth is at 12%, which puts these countries a few years behind the US in terms of cloud adoption. He estimated that the cloud markets of France Germany, India, Spain and Italy were growing at 6% to 8%, which puts them five to seven years behind the US.
He attributed the slower rate of growth in these countries to their local data privacy and data sovereignty regulations, which makes it harder to process personally identifiable data of citizens from these countries in the public cloud.
For the rest of the globe, Gartner has estimated that cloud adoption is only growing at 4%. These counties include Indonesia, where cloud computing is struggling to gain traction due to poor telco infrastructure, and Japan.
While Japan has superior network infrastructure, Lovelock said it was an expensive country to get into. “Your applications all need to support a double byte character set,” he said, which means they need to be written. But since the cloud market in Japan is quite small, Lovelock did not expect many software-as-a-service (SaaS) providers to make their software available in the Japanese market.