Gartner predicts dramatic changes in data centre market

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13 September 2014
Data centre market disruption

Highly-disruptive competition, big cloud provider dominance, economic warfare and nationalism will force dramatic changes in the data centre market by end-2016, said Gartner in its latest report on the data centre market. 

These factors will occur with different intensities over different time frames, said the IT research and advisory company. However, elements of each are already in play and will become visible no later than early 2016, said Joe Skorupa, vice president and distinguished analyst at Gartner. However, “radical action by just one significant player could accelerate the market disruption of any of the factors", he added.  

In Gartner’s view, although the data centre market seems to be poised for growth, existing assumptions regarding the ongoing growth of the sector are unlikely to be realised. They rely heavily on the current base of traditional enterprise IT end users, and a vendor community that is more likely to support the status quo, rather than introduce risk and break the enterprise IT mold.

"Underneath this calm surface, increasing market pressures are driving a change in vendor behaviours, which, along with the four disruptive factors, make the market ripe for a period of major disruption. These behaviours will become more obvious as the pace of change increases."

Gartner believes that vendor behaviours will fall into one of three categories: Protectors who aggressively defend their market share, revenue, profit margins and large installed base during periods of transition; Evolutionary Disrupters who strike a balance between disrupting the existing business model of protectors, while protecting their own business from other disrupters; and Revolutionary Disrupters who challenge the status quo, with more-nimble business models and less-complex go-to-market strategies adopting radical new approaches to selling.

Gartner outlined the likely impacts of each disruptive factor:

1)      Highly-disruptive competition

According to Gartner, there are numerous potentially disruptive technologies in today’s data centre infrastructure market including software-defined networking and software-defined storage, network function virtualisation; extreme low-energy processors and webscale-integrated infrastructure. A Protector turned Revolutionary Disrupter could leverage these disruptive technologies to upset adjacent markets.

2)      Big cloud provider dominance

The Software-as-a-Service/cloud-first approach to new, high-growth workloads will spell the end of growth for traditional data centre vendors. It means that growth in infrastructure hardware will be generally aligned to web-scale architectures. Traditional managed service providers and infrastructure providers will fail to deliver compelling alternatives to Platform-as-a-Service from Amazon, Google, IBM, Microsoft and Baidu.

3)      Economic warfare

The two camps of data centre infrastructure providers, East and West, will need to protect and/or increase their influence. Gartner predicts that China, buoyed by deep resources, increasingly respected brands and strong original design manufacturer (ODM) suppliers with headquarters in Taiwan and electronics manufacturing service in China, and increasing anti-US sentiment, will increase its share of the data centre infrastructure market by two percentage points by the end of 2017, at the expense of Western companies.

4)      Nationalism

According to Gartner, the Snowden effect will drive severe market fragmentation as buyers come to believe that none of the large multinational providers are trustworthy, and begin to shift to in-country-developed technologies, and OSS and hardware.