3 reasons the data center infrastructure market is sluggish
Analyst firm IHS says its tracking of several segments has shown continued contraction over the past two years.
In a release announcing the results of a study on data center cooling, analyst firm IHS pointed to three reasons why the data center infrastructure market “has witnessed continued contraction of revenue over the last two years.”
Senior analyst Elizabeth Cruz authored the study titled “Data Center Cooling – World – 2014.” She said, “We see several reasons for the sluggishness in the data center segment.” Specifically, she identified the following.
- The economy—“This is still a major factor in companies putting off large capital investments like data center builds,” Cruz said.
- Outsourcing to colocation or cloud providers—“and by moving what small data centers they do have into one centralized location,” Cruz said. “This consolidation leads to more-optimized data centers, which maximize efficiency and reduce the need for power and cooling.”
- Virtualization and server-technology improvement—which, Cruz pointed out, “lead to an increased compute performance per watt, which then requires less power and cooling backup.”
The outlook is not entirely bleak for the data center infrastructure market; IHS said that in the medium term it “projects a return to growth in the data center market, as consolidation and technology improvements can no longer absorb the increased digitization and resulting compute, storage, and processing needs.”