The Middle East and Africa (MEA) enterprise infrastructure hardware market, which includes servers and external storage, suffered a year-on-year (YoY) decline of 8% in the first half on 2017 to total $1.1 billion, according to the latest Quarterly Server and Disk Storage Systems Tracker from International Data Corporation (IDC). The global technology research and consulting firm blames the ongoing oil crisis, regional unrest, currency fluctuations, and political instability in certain parts of the region for the decline in enterprise spending.
“We are witnessing a shift in purchasing patterns as organisations are increasingly looking to consolidate their server purchases and optimise their installed base rather than boost their server capacity through new additions,” says Victoria Mendes, a Senior Research Analyst for Enterprise Infrastructure at IDC MEA. “We are also seeing a shift towards higher end servers when new purchases are made; this trend is particularly evident in the x86 space, where there was a 13% YoY decline in the number of units shipped in H1 2017, but only a 5% decline in revenue. As such, even vendors that were previously focused on volume sales are now engaging in strategic projects throughout the region.”
Despite suffering a YoY decline in value of 4% in H1 2017, the MEA storage market saw a huge uptake of flash drives during this period. The value of the flash space was up 21% YoY in H1 2017 versus a decline of 37% over the same period for hard disk drives (HDDs). While there is a general shift underway from traditional HDDs to flash drives (both all-flash and hybrid flash), the huge decline of HDDs was caused by a shortage of memory chips, which is negatively impacting shipments globally.
Looking ahead, IDC expects the enterprise infrastructure hardware market to grow 3% in the second half of 2017 when compared with the corresponding period of 2016. This will result in a closing revenue of $2.4 billion for 2017 as a whole, which represents a decline of just 2% on the previous year. This is better than IDC’s initial forecast and is being spurred by a number of major projects taking place this year in the oil and gas, education, and banking sectors.
“We expect to see some recovery in the second half of the year with new budgets being released across several countries in the region,” says Mendes. “In the longer run, we are definitely going to see a move towards more converged and cloud offerings, which will result in traditional servers and external storage seeing only very low single-digit growth over the next five years.”
IDC’s Quarterly Server and Disk Storage Systems Tracker is a quantitative tool for analysing the server market on a quarterly basis. The tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, country, operating system, price band, CPU type, and architecture.