The government has recently announced production linked incentive scheme for IT hardware that includes servers as well. Government pipeline, as per IDC, looks promising and can expect spend in H2 2021
The overall server market in India witnessed a year-over-year (YoY) decline of 11.2 per cent in terms of revenue to reach $266.1 million in Q4 2020 (Oct-Dec) versus $299.6 million in Q4 2019, according to the latest IDC Worldwide Quarterly Server Tracker, Q4 2020. The x86 server market contribution grew to 92.9 per cent in terms of revenue, a growth of 4.8 percentage points over last year same quarter.
The highest contribution in the x86 market mainly came from the professional services, telecommunications, and manufacturing verticals. In the professional services vertical, original design manufacturers (ODM) and new-age IT companies witnessed positive YoY growth with respect to the server spend. At the processor brand level, AMD witnessed YoY revenue growth of 4.7 percentage points claiming a revenue share of 8.4 per cent at the end of Q4 2020.
“During 2020, the server market failed to recover as it remains impacted due to the pandemic. For 2021, we expect the server market demand to grow across hyperscalers, local data center players, telecommunication companies, banking and financial institutions, and manufacturing firms. Government pipeline looks promising and can expect spend in H2 2021,” says Harshal Udatewar, market analyst, Server, IDC India.
Weakening demand across different industries
The x86 server market in terms of revenue declined YoY by 6.3 per cent to reach $247.2 million in Q4 2020 from $264.0 million in Q4 2019. The contribution largely came from the custom-built server category with revenue growth of 28.7 per cent YoY. Hyperscalers continues to spend towards building robust data centers and support the global and local customer demands. The General-purpose server revenue declined by 13.4 per cent due to the weakening demand across different industries. During Q4 2020, verticals such as utilities, resource industries, and securities and investment services witnessed the highest YoY growth in terms of revenue at 331.5 per cent, 218.7 per cent, and 160.6 per cent, respectively.
“The non-x86 server market declined YoY by 47.1 per cent to reach $18.9 million in revenue in Q4 2020. IBM continues to dominate the market accounting for 49.4 per cent of revenue share, during Q4 2020 with a revenue of $9.3 million. HPE came at second position followed by Oracle with a revenue share of 27.8 per cent and 8.3 per cent, respectively,” read IDC’s report.
In Q4 2020, Dell Technologies emerged as the top vendor in the India x86 server market with a revenue share of 29.6 per cent and a revenue of $73.1 million. Top three verticals for Dell Technologies were professional services, banking, and discrete manufacturing. HPE came at second spot with a revenue share of 19.5 per cent and a revenue of $48.2 million. Key verticals for HPE were telecommunications, discrete manufacturing, and professional services. At number three is Lenovo with a revenue share of 10.9 per cent and a revenue of $27.0 million. Cisco came in fourth accounting for a revenue share of 9.1 per cent and a revenue of $22.6 million.
“India’s economy is on the verge of gaining momentum post Covid-19 lockdown and roll out of coronavirus vaccines. From an enterprise spending perspective, we anticipate investments in compute to come from global hyperscalers and local DC players, telecommunications vertical, banking sector, and manufacturing vertical,” read the report by IDC.
It continued, “Telecommunications spending would be focused on network modernization, VAS services, and preparing for 5G roll out. At present, India x86 server market is expected to witness a YoY growth in value by 29.7 per cent during the period of 2020-2021, according to the latest IDC WW Quarterly Server Forecast, Q4 2020.”