Report: IT rack, enclosure market to reach $2.6B by 2016 despite current softness

IMS Research forecasts revenues for IT racks and enclosures to grow by nearly a billion dollars over the next five years, despite weak growth this year due to the Eurozone crisis.

A new report from IMS Research forecasts revenues in the global market for IT racks and enclosures to grow by nearly a billion dollars over the next five years, from an estimated $1.7 billion in 2011 to $2.6 billion at the end of 2016. Most of the revenues will be added in Asia, says IMS, where new data center construction and upgrades are driving a fast rate of growth.

The report projects overall revenue growth to average close to 9 percent over the next five years. However, growth for this year is forecasted to be weaker due to the continuation of the Eurozone crisis and the associated drop in infrastructure investment in the region. According to the research, Asia will add the most revenues over the next five years and will grow at a faster rate than most of the rest of the world.

“China is an important market to watch," says the report's author, Elizabeth Cruz "IMS Research projects it will nearly double in revenues over the next five years. Given the region’s rapidly growing economy, there are major opportunities for the development of both networking and data center infrastructure.” Aside from China, other regions expected to grow by double-digits over the five-year forecast include Brazil, the Middle East, Russia, and India. These regions’ growing economies and increasing deployment of IT hardware will drive the need for racks and enclosures in the future, contends IMS.

Cruz continues, “There are three major factors affecting growth in the IT racks and enclosures market: the economy, data center construction and refurbishment, and the trend towards virtualization and server consolidation. Growth of the first two drive increased rack and enclosure revenues, while server virtualization and consolidation inhibit rack growth.”

Cruz notes that because virtualization optimizes the performance of servers, it also reduces the number of servers and racks for a given computing load. While this is an important trend to watch, IMS believes that the impact of economic and data center growth will more than offset this negative trend. The conclusion of the research is that, though 2012 will be a slow growth year globally, the market will recover with a billion dollars being added over the next five years. “Rack manufacturers can rest assured that ample opportunity abounds, especially if looking to the BRIC regions and the Middle East,” adds Cruz.

Recently acquired by IHS Inc. (NYSE: IHS), IMS Research regularly analyzes all aspects of the data center infrastructure market. More information can be found here.

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