Global Market for Low-End Servers to Reach 17.4 Million Units by 2017, According to a New Report by Global Industry Analysts, Inc.

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GIA announces the release of a comprehensive global report on low-end servers market. The global market for low-end servers is forecast to reach 17.4 million units by the year 2017, primarily driven by strong demand from the SMB segment. The market will also be driven by steadily increasing demand from developing markets and growing replacement need among companies seeking to replace aging x86 servers that were retained in operation during the recession period.

Low-End Servers: A Global Strategic Business Report

Incessant usage of Internet coupled with growing eBusiness activity in the recent years has resulted in the need to process large data volumes, driving the demand for greater investments in IT infrastructure, including servers. Emergence of large-scale data centers has emerged into a key factor driving growth of the overall server industry. Internet sector workloads require scale out environment, wherein many servers are used to achieve high performance. Presently, efficient management of servers is becoming predominantly an important factor in determining the competitive advantage of enterprises. As efficient management of servers gathers steam, an increasing requirement is being felt for servers, which are scalable, efficient and cost effective. This in turn is driving the evolution of broader portfolio of server solutions, covering a wide area of operating environments, which includes enterprise and SMBs. With advantages such as low-cost, improved processing and security stacked against its favor, low-end servers especially are proving to be a sturdy value proposition for enterprises, which are on a look out for cost effective technology solutions.

Flying in the face of conventional wisdom, several large IT equipment/system vendors have evinced great business interests in low end servers, despite the conventional profitability limitations posed by a low tier market, such as, compressed profit margins, heavy commoditization and reduced scope for product differentiation. The massive untapped opportunities present at the low end of the price tag, especially in developing markets, present a robust future outlook for low-end server market. Additionally, the advantages of volume dominance gained in operating in this segment, is critical in helping manufacturers achieve incremental growth. Another critical advantage offered by low cost competition is forced identification of newer ways of reducing the cost of innovation, which will also help in reducing production costs of higher priced servers thus resulting in double whammy benefits to the manufacturer. Additionally, clustering and grid solutions are enabling low-end x86 servers to offer replacement for expensive high-end servers, which is fuelling the demand further for these low-end boxes.

The recent economic recession exerted a deep impact on the market for low-end servers during 2008-2009. The depressed economic climate forced companies to dilute their IT budgetary outlays, and critically re-evaluate their IT operations, and infrastructure. This pruning down of investment outlays to hedge the financial weakness in the market as well as in the balance sheets eroded shipments of servers, especially x86 servers. Also, small and medium businesses (SMBs), which constitute a major portion of buyers for the low-end servers, tightened purse strings, which negatively impacted the low-end x86 server revenues.

The market in addition to the ravages of the recession was also boxed in with declining shipments as a result of growing preferences for virtualization as a cost rationalization strategy. Virtualization allows IT departments to make maximum utilization of available computer resources without the need for additional investments on new IT infrastructure, thus driving cost benefits to the companies. Server virtualization, which is the concept of running multiple operating systems on a single server, reducing the number of in physical servers required weakens the business case for the use of multiple lower end servers. Server virtualization therefore as a major recession proofing strategy for corporate IT departments, bit deeply into world shipments of low end-servers.

However with the heat and dust raised by the recession settling down, the future is forecast to witness steady recovery in demand for low-end servers. This is primarily because cost effective operation of IT assets will emerge to become a powerful strategy for companies to recover and fight the lingering aftershocks of the global recession. With most companies expected to remain cost wary even into the post recession period, low-end servers by sheer virtue of their lower price structure will stage a comeback. Additionally, growth will also be driven by steadily increasing demand from developing markets and by rising replacements as companies seek to replace aging x86 servers, which were retained in operation during the recession period 2007 through 2009. Popularity of unified designs, which involves a combination of servers, storage and networking, is forecast to positively benefit the market for low-end servers by enabling wider adoption. Low-end servers with high processing capabilities and affordable prices are expected to score the highest gains. Growing demand from small and medium business segment bodes well for the future of low-end server market. Depleting cost of servers combined with high processing ability are driving SMBs, particularly those part of the supply chain of larger organizations, to use low-end servers as business intelligence tools in the place of high-end desktops to extract information from ERP systems.

As stated by the new market research report, Asia-Pacific is the most prominent regional market for low-end servers, with volume sales from the market growing at a CAGR of about 11.45% over the analysis period 2009-2017. Rapid infrastructure development, and robust demand for servers with high performance and low-price points, especially among growing number of SMBs in the region is driving the market for low-end servers in Asia-Pacific.

Major players in the marketplace include Acer America, Advanced Micro Devices Inc, Cisco Systems, Dell, Fujitsu Limited, Hewlett-Packard Company (HP), Itautec S/A, IBM Corporation, Intel Corporation, Microsoft Corporation, and Oracle Corporation among others.

The research report titled “Low-End Servers: A Global Strategic Business Report” announced by Global Industry Analysts Inc., provides a comprehensive review of market trends, issues and growth drivers. The report provides market estimates and projections for Low-End Servers in Units across all major geographic markets including US, Canada, Japan, Europe (France, Germany, Italy, UK, Spain, Russia and Rest of Europe), Asia-Pacific, Latin America and Rest of World.

For more details about this comprehensive market research report, please visit –

About Global Industry Analysts, Inc.
Global Industry Analysts, Inc., (GIA) is a leading publisher of off-the-shelf market research. Founded in 1987, the company currently employs over 800 people worldwide. Annually, GIA publishes more than 1300 full-scale research reports and analyzes 40,000+ market and technology trends while monitoring more than 126,000 Companies worldwide. Serving over 9500 clients in 27 countries, GIA is recognized today, as one of the world's largest and reputed market research firms.

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Global Industry Analysts, Inc.
Telephone: 408-528-9966
Fax: 408-528-9977
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