Server Market Size, Share, & Trends Analysis Report By Product, By Enterprise Size (Micro, Small, Medium, Large Size), By Channel, By End-use, By Region, And Segment Forecasts, 2024 - 2030

Server Market Size & Trends

The global server market size was estimated at USD 94.09 billion in 2023 and is anticipated to grow at a CAGR of 9.8% from 2024 to 2030. The expansion of the server industry is significantly driven by the widespread adoption of smartphones and the surging count of data centers worldwide. The expansion of the market is due to the increasing establishment of new data centers across the globe. Numerous cloud service providers, along with sectors like IT and telecom, healthcare, banking, financial services & insurance (BFSI), and government and defense, are modernizing their server capabilities to efficiently handle the escalating amount of data. Upgrading IT infrastructure is crucial for enhancing security, storage capacity, and processing speed, which are essential for coping with larger volumes of data.

The rise in applications with specific needs and high computational demands drives users and service providers toward using cloud servers for better performance. Businesses are moving to cloud-based servers to improve their worldwide networking capabilities while reducing their IT systems' operational and maintenance expenses. Furthermore, the need for substantial investment in cooling systems by cloud service providers has become essential as physical servers generate a significant amount of heat. Consequently, strategies like server leasing and virtualization have become more popular lately.

Continued advances in emerging technologies, such as AI, IoT, big data, cloud computing, and 5G, and the growing adoption of innovative solutions based on these technologies across various industries and industry verticals are driving the demand for edge data centers in emerging economies. As businesses are moving to private and public clouds, the edge cloud, co-location facilities, and data centers have started utilizing software-defined networks (SDNs) and virtualization to facilitate the implementation of new data analytics models. However, having realized that the incumbent servers cannot handle the complex workloads, market players in the region are introducing new server designs with higher computational power.

Various governments worldwide have been involved in multiple initiatives to improve the IT infrastructure for which production schemes have been initiated. For instance, in January 2023, India's central government announced the Production Linked Incentive (PLI) scheme and additional incentives for IT hardware and server manufacturers. The government also intends to encourage manufacturers to integrate Indian-designed IP into their products. These initiatives, amid rapid digitization in India, are expected to make servers more affordable and drive market growth.

Market Characteristics & Concentration

The product environment in the market is evolving, and companies are establishing advanced data centers to cater to the increasing demand. For instance, in April 2024, AdaniConneX, the joint venture between EdgeConneX Inc. and Adani Group, plans to secure up to USD 1.44 billion in sustainability-linked financing. Established to develop data centers throughout India, the JV will allocate these funds towards future data center facilities. This financing initiative will raise the total pool to USD 1.65 billion, following a USD 213 million capital raise in June 2023. The funding includes an initial commitment of USD 875 million, which may be increased to USD 1.44 billion, contingent on sustainability goals. The JV has pledged that the facilities will achieve "world-class" power usage effectiveness (PUE) ratings.

With organizations' increasing digital transformation, there is a growing demand for servers that handle the workload efficiently. Companies are collaborating to bring significant financial gains for both the organization and expand their market reach. For instance, in November 2022, Dell Inc. partnered with Advanced Micro Devices, Inc. to strengthen the PowerEdge portfolio. The microchip partnerships are strategic focal points of hardware-focused HPC companies, which resulted in this partnership.

Moreover, regulatory trends in the market are increasingly focused on data privacy and security considerations. There is increasing demand for servers in the financial sector. Financial institutions must store and frequently access critical customer data, such as credit card details and account numbers. Hence, they must comply with the PCI-DSS standards to ensure transactional security. In the U.S., government organizations migrating to the cloud must join the FedRAMP program. Similarly, companies located in the European Union must abide by the General Data Protection Regulation (GDPR) to ensure data security and privacy protection.

In the market, the threat of substitutes can be termed moderate; cloud computing, edge computing, and hyper-converged infrastructure (HCI) are some of the substitutes for servers. Cloud service providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform offer scalable and flexible computing resources that can replace on-premises servers. Businesses increasingly adopt cloud solutions to reduce capital expenditure, enhance scalability, and improve disaster recovery capabilities.

Furthermore, servers are used in various sectors of large-scale enterprises, cloud service providers, data centers, telecommunications, and financial services. The proliferation of data-driven technologies and the Internet of Things (IoT) has led to the rapid expansion of data centers. These facilities are critical for storing, processing, and managing data, necessitating large quantities of high-performance servers to handle the workload efficiently.

Product Insights

The rack segment accounted for the largest market share, over 37%, in the market in 2023. Rack servers are configured to support a broad range of requirements and are individually mounted in a rack-the rack servers' construction and design suit high and low computing requirements. Besides, rack servers need less floor space, can be scaled up easily, and can be cooled instantly. The segment growth can be attributed to the growing need for scalable data centers, high-density computing, and advancements in emerging technologies, such as IoT, cloud computing, and edge computing, creating vast growth opportunities for market players. Rack servers provide a facility for computing and storing information at a lower cost, which helps companies establish servers for their private use.

The open compute project segment is anticipated to expand at a CAGR of 9.9% during the forecast period. The open compute project allows small- and medium-sized enterprises to replicate the efficient data center designs made public by established cloud service providers. OCP assists in improving data center designs to shorten build times, reduce material use, and maximize efficiency. OCP offers an innovative Rapid Deployment Data Center (RDDC) concept and a lean and modular construction approach that helps lower Capital Expenditure (CAPEX) and Operational Expenditure (OPEX) while also providing simplicity, high density, scalability, manageability, energy and cooling efficiency, and serviceability.

Enterprise Size Insights

The large segment accounted for the largest market share of over 65% in 2023 in the market. Large enterprises are shifting their focus toward hosted application servers because they can handle workloads from numerous sites, commonly from the same database. Hosted application server deployment is more accessible than traditional application servers as it requires no upfront installations and fewer system integrations, reducing operating and maintenance costs. A hosted application server is wholly managed by a hosted service provider, which regularly updates the version and offers continuous technical & customer support. Market players focus on launching industry-specific solutions to attract potential business clients and increase their market revenue. For instance, in May 2022, Nokia Corporation introduced the Nokia Cloud Native Communication Suite explicitly designed for 4G, 5G, and WiFi deployments. The solution features a Cloud Native Network Function (CNF), Telephony Application Server (TAS), Media Resource Function (MRF), and others.

The medium segment is anticipated to grow at a CAGR of 9.4% during the forecast period. The demand for servers among medium enterprises can be attributed to the growing adoption of cloud services, the need for green data centers, and the utilization of complicated business tools, such as big data and data analytics. Furthermore, private cloud server solutions can help medium enterprises enhance their business processes. A private cloud server offers benefits such as lower operational costs, options to pay per usage, and offerings tailored to business requirements.

Several market players offer scalable infrastructure and affordable services ideal for medium enterprises, which is expected to encourage medium enterprises to adopt private cloud deployment. Furthermore, private cloud server solutions enable medium enterprises to capitalize on 24x7 assistance and eliminate the need to hire dedicated IT personnel. These benefits are expected to further supplement the demand for servers in medium enterprises during the forecast period.

Channel Insights

The direct segment accounted for the largest market share of over 34% in 2023 in the market. The segment growth can be attributed to the customized designs and competitive prices offered by Original Design Manufacturers (ODMs). ODM servers are cheaper as the manufacturers sell servers directly to customers, which reduces promotional and intermediary costs. Furthermore, with direct distribution, they can control the customer experience and build brand awareness. Moreover, direct distribution can shorten lead times by sending goods directly to customers when they are ready for deployment. These benefits are expected to further supplement the growth of the direct channel during the forecast period.

The reseller segment is anticipated to expand at a CAGR of 9.8% over the forecast period. Resellers constitute the technology distribution channel amid an extensive IT service providers and sales agents network. Working with a reseller can also help users find products faster. An organization that needs to buy multiple technology components can do so through a single reseller rather than directly approaching multiple manufacturers or service providers.

Furthermore, resellers operate across a wide range of industry verticals. For instance, a web hosting reseller buys services from a larger hosting company and resells them to customers. A reseller may also buy and resell server access in a hosting and colocation facility. The reseller functions as a retailer, acquiring and reselling services from hosting and internet service providers acting as wholesalers.

End-use Insights

The IT & telecom segment accounted for the largest market share of over 39% in 2023 in the market. For the last few years, the IT & telecom industry has seen a transformation in the implementation of fixed-to-mobile broadband services. The IT industry has seen a growing implementation of cloud-based services over on-premise ones. Subscribers now get most services through a single service provider. Furthermore, mobile phones' constantly evolving multimedia capabilities are giving rise to new issues related to after-sales service delivery and execution. Moreover, network operators are transforming into software companies and predominantly into information technology companies. These factors are contributing to market growth.

The BFSI segment is anticipated to grow at a CAGR of 10.2% during the forecast period. Web-based banking systems use secure, dedicated servers throughout a banking network to ensure that transactions are secure and authentic. Using secure servers to link transaction processes between various parties, such as buyers, sellers, and financial institutions, helps institutions develop and maintain several banking applications and offer concurrent support. They also help reduce financing costs and improve business efficiency. The proliferation of cloud computing in financial services has further revolutionized the sector. The flexibility and scalability of day-to-day operations in the financial sector have improved significantly with the growing adoption of and advances in cloud computing technology.

Regional Insights

North America server market held a significant share of over 43% of the market in 2023. The region's growth can be attributed to significant companies in the market, including Alphabet Inc., Dell Inc., Hewlett Packard Enterprise Size Development LP, and Microsoft. Moreover, the high usage of cloud services in the region contributes to the regional market's growth.

U.S. Server Market Trends

The server market in the U.S. is growing significantly at a CAGR of 9.3% from 2024 to 2030. The U.S. is the world’s largest economy, with a GDP of USD 25.44 trillion as of 2021. The country is also home to 50% of the world’s hyper-scale data centers, according to the United Nations Conference on Trade and Development’s Digital Economy Report 2021. Moreover, according to Bureau of Economic Analysis, digital economy real value added grew by 6.3% in 2022.This, coupled with the presence of major companies such as Microsoft, Hewlett Packard Enterprise Size Development LP, Dell Inc., and Amazon Web Services, Inc., is expected to drive the growth of the U.S. market over the forecast period.

Europe Server Market Trends

Europe server market is growing significantly at a CAGR of 9.2% from 2024 to 2030. The European market is positively impacted by the adoption of various strategic initiatives by companies to accelerate the growth of the market. Some major initiatives include OneSignal moving its data centers to Europe (announced in April 2022), Microsoft's rollout of EU data boundary solutions for the public and commercial sector customers in the European Union and European Free Trade Association (announced in December 2022), Oracle's launch of new sovereign cloud regions in Germany and Spain (announced in July 2022), and TikTok's plan to open two new data centers in Europe (announced in February 2023).

The server market in UK is growing significantly at a CAGR of 7.9% from 2024 to 2030. The market growth in the UK can be attributed to the country's large digital sector, which accounted for GBP 151 billion (USD 186.41 billion) in 2019. The UK government aims to strengthen its digital strategy by increasing the annual gross value by an additional 41.5 billion (USD 51.23 billion) by 2025. Moreover, the country is witnessing an increase in the number of data centers established, which is expected to contribute to market growth over the coming years.

Germany server market is growing significantly at a CAGR of 9.9% from 2024 to 2030. This growth can be attributed to various strategic initiatives adopted by key players and the government, which directly fuel the need for servers in the country. Some initiatives market players undertake include Alibaba Cloud's plan to launch its third data center in Germany, among others.  

The server market in France is growing significantly at a CAGR of 8.3% from 2024 to 2030. This growth can be attributed to the government's initiatives to improve cloud technology and digitalization, among other things. Some recent government initiatives include the announcement of a national strategy for cloud technology aimed at tapping the economic and industrial opportunities of cloud technologies in France.

Asia Pacific Server Market Trends

Asia Pacific server market is growing significantly at a CAGR of 10.7% from 2024 to 2030. The growth of the Asia Pacific market can be attributed to significant players in the region, including Tencent Cloud, Huawei Technologies Co., Ltd., Baidu, and Alibaba.com. Moreover, the area has been witnessing high growth in digitalization, especially in countries such as India. According to the Southeast Asia Development Solution (SEADS), Southeast Asia’s digital economy was worth USD 200 billion in 2022. The high growth of the digital economy is fueling the demand for servers, which is expected to contribute to the growth of the Asia Pacific market over the forecast period.

The server market in China is growing significantly at a CAGR of 11.2% from 2024 to 2030. Due to export bans, China is facing heat from countries such as the U.S.. For example, the Joe Biden administration imposed export restrictions on various Chinese companies, including the server manufacturing firm Inspur. Despite this, the Chinese market is expected to grow significantly over the forecast period. The country has been at the forefront of advanced technologies, including blockchain and AI, which are increasing the need for servers.

Japan server market is growing significantly at a CAGR of 9.7% from 2024 to 2030. Japan is among the top countries in terms of technological development and adoption, which has significantly contributed to the country’s market growth over the forecast period. Some major initiatives include the partnership between Mitsui & Co., Ltd. partnership and NVIDIA to enable pharma companies in Japan to use the Tokyo-1 NVIDIA DGX supercomputer.

The server market in India is growing significantly at a CAGR of 11.8% from 2024 to 2030. The growth of the Indian market can be attributed to factors such as increasing digitalization, improving the digital economy, and government initiatives to boost the adoption of cloud technology, among others. For instance, in November 2022, the Data Security Council of India and Google announced a new initiative, Secure with Cloud, to enable the public sector and government to deploy and transform the cloud, thereby driving the country's digital future.

Middle East & Africa Server Market Trends

Middle East & Africa server market is growing significantly at a CAGR of 8.4% from 2024 to 2030. The regional market's growth can be attributed to the improving digital infrastructure, which can be credited to various initiatives taken by the government and key companies to accelerate digitalization. Some recent initiatives include the announcement of the Digital Transformation with Africa (DTA) initiative post-U.S.-Africa Leaders' Summit to expand digital access and strengthen the digital environment across the continent.  

Key Server Company Insights

Some of the key companies operating in the market include Dell Inc, Hewlett Packard Enterprise Size Development LP, and Intel Corporation, among others are some of the leading participants in the market.

• Dell Inc. is one of the significant companies in the market. The company offers a variety of servers, including rack, tower, and modular. It also provides various choices regarding processor, rack density, and socket. Dell Inc.'s PowerEdge servers can address the most challenging workloads across multiple IT environments, including SAP, Oracle, Microsoft SQL, and AI. Some of the company's major clients include Baker County Sheriff's, Clearpath Robotics, Inc., and Sentara Healthcare, among others.

• Hewlett Packard Enterprise Size Development LP is another major player in the market. The company offers various types of servers, the major ones being the HPE SUPERDOME FLEX server and the HPE APOLLO 6500 server system. The primary applications of the servers offered by the company include data center modernization, big data server solutions, converged systems, infrastructure security, and IoT, among others.

Fujitsu and ASUSTeK Computer Inc. are some of the other market participants in the market.

• FUJITSU is a multinational information and communication technology company offering a wide range of information technology products, solutions, and services. The company’s business segments include technology, ubiquitous, and device solutions. The technology solutions segment provides system integration & consulting services, infrastructure services, outsourcing services, system products such as servers and storage systems, and network products such as optical transmission systems, mobile phone base stations, and other communications infrastructure.

• ASUSTeK Computer Inc., commonly called ASUS, is a multinational company based in Taiwan that manufactures a wide range of computer hardware and consumer electronics. ASUS provides server solutions designed for enterprises, SMBs, and data centers. These include rack servers, tower servers, and workstations optimized for performance and reliability.

Recent Developments

• In March 2024, Dell Technologies announced a strategic partnership with Nvidia at the GTC developers event, unveiling the "Dell AI Factory with Nvidia" platform. This partnership aims to integrate Dell's hardware and software with Nvidia's AI infrastructure. Similarly, Dell revealed that its PowerEdge XE9680 rack servers will support a range of new Nvidia GPUs, including the B100, B200, and H200 Tensor Core models.

• In January 2023, Hewlett Packard Enterprise Size Development LP announced its partnership with Intel Corporation to extend its next-gen ProLiant server portfolio. Both companies are working toward developing technology to support edge use cases for customers by making enhancements to the Intel Xeon processor to meet the requirements of the hybrid network.

• In January 2023, Inspur released the Inspur G7 server series, fully supporting 4th Gen Intel Xeon Scalable Processors. The new line of servers offered enhanced functionality, intelligent operation & maintenance, openness, performance, and sustainability. Moreover, the new line provided 61% improved performance compared to the previous generation of server series based on intel.

• In June 2022, HPE announced the availability of HPE ProLiant RL300 Gen11, a cloud-native server. The server’s specification included a 1-socket, 1U server capable of supporting 16 DIMMS and a maximum memory of 4TB per system. The servers offered have been brought by targeting social platforms, cloud-based services, e-commerce, and media streaming.

Server Market Report Scope

Global Server Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the server market report based on product, enterprise size, channel, end use, and region.

• Product Outlook (Revenue, USD Billion, 2018 - 2030)

  • Rack

  • Blade

  • Tower

  • Micro

  • Open Compute Project

• Enterprise Size Outlook (Revenue, USD Billion, 2018 - 2030)

  • Micro

  • Small

  • Medium

  • Large

• Channel Outlook (Revenue, USD Billion, 2018 - 2030)

  • Direct

  • Reseller

  • Systems integrator

  • Others  

• End Use Outlook (Revenue, USD Billion, 2018 - 2030)

  • IT & Telecom

  • BFSI

  • Government & Defense

  • Healthcare

  • Energy

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Argentina

  • Middle East & Africa

    • U.A.E

    • Saudi Arabia

    • South Africa