Gurvan Meyer, Enterprise Business Analyst at CONTEXT
Revenue sales of enterprise servers through distribution slumped by -4.4% year-on-year (YoY) in 2021, but storage and networking performed well during the year despite a poor Q4 all-round, according to CONTEXT, the IT market intelligence company.
Unpredictable market conditions at the end of 2021 have made accurate forecasts extremely challenging.
The enterprise server market ended the year with a -15% YoY revenue decline, driven by product supply issues and the reintroduction of stricter COVID-19 measures and resulting business uncertainty. Decline for the year was less dramatic, but follows a -9% YoY drop in 2019 and a -15% slide the year after. This can be explained by longer term trends such as migration to hybrid cloud infrastructure and the increasingly software centric datacentre, which have hit on-premises server sales.
The tower form factor continues to decline, dropping from a market share of 31% in Q1 2021 to around 25% by Q4 in terms of volume. The COVID-driven move to hybrid working and long-term virtualisation trends can help explain this slump in popularity.
Things in the enterprise storage market were more positive. Although YoY revenues sales declined by -4.2% versus Q4 2020, overall the category grew +4.6% for the year. Product supply challenges and COVID restrictions can again explain much of the Q4 drop, and the HCI segment in particular recorded poor performance of -13% across Europe. Revenue sales for arrays didn’t move in Q4, but grew 5.1% over the year while HCI sales grew 5.3% YoY in 2021.
CONTEXT forecasts for enterprise networking segment were rather optimistic. In the end it finished the year with a -0.5% YoY decline in Q4. “Supply difficulties will persist throughout 2022, while the long-term trend towards hybrid working and reduction in office space will lower investments in switching infrastructure”, said Gurvan Meyer, Enterprise Business Analyst at CONTEXT. “However, Q4 2021 revenue was actually fairly high and only moved into negative territory due to comparatives with Q4 2020, when business investment was strong following the end of the first wave of COVID.”
The segment as a whole also grew 5.9% in 2021 YoY including 5.2% in the UK. The latter market has been lagging the rest of Europe considerably through most of 2021, so its return to growth is good news.
Switching is the main culprit dragging down growth overall for the networking market. Its revenue sales declined -2.1% YoY in Q4, the category’s lowest performance of the year. At the other end, wireless continues to expand, with +5.7% YoY growth in Q4 and +13% overall for the year versus 2020. It’s up even more (17%) on 2019, which bodes well for the future.