Home > Semiconductors & Electronics > Data Center > Data Center Infrastructure > Data Center Rack Server Market

Data Center Rack Server Market - By Form Factor (1U, 2U, 4U), By Data Center (Tier 1, Tier 2, Tier 3, Tier 4), By Data Center Size (Small & Mid-sized, Enterprise, Large), By Application & Forecast, 2024 – 2032

  • Report ID: GMI8387
  • Published Date: Mar 2024
  • Report Format: PDF

Data Center Rack Server Market Size

Data Center Rack Server Market was valued at USD 68.5 billion in 2023 and is anticipated to register a CAGR of over 13% between 2024 and 2032. The ever-growing volume of data generated by individuals and businesses is significantly boosting the industry.

Data Center Rack Server Market

As data volume increases, companies and organizations need additional storage capacity to accommodate it. Rack servers provide a scalable option, allowing enterprises to add extra servers to their data center as needed, enabling them to keep up with their growing data storage requirements. Processing massive volumes of data requires substantial processing power. Rack servers may feature strong CPUs and numerous cores, allowing them to effectively tackle complicated data processing tasks. Compared to other alternatives, such as high-end workstations, rack servers provide a more cost-effective approach to increasing storage and processing capacity. This makes them an appealing alternative for enterprises of all sizes, particularly those working with massive datasets.

For instance, in December 2023, Micron Technology introduced its latest Quad-level Cell (QLC) NAND SSDs tailored for data center, aiming to facilitate efficient storage of expansive datasets. This advancement highlights the adaptation of storage solutions to accommodate the increasing data volumes managed within data center.

The rising cloud computing adoption is a significant factor in the data center rack server market. Cloud Service Providers (CSPs), such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP), rely heavily on data centers to store and manage data for their large user base. Cloud computing services provide scalability, which allows customers to increase or reduce resource utilization based on their requirements. This creates a requirement for flexible data center infrastructure. Rack servers provide a suitable option, allowing data centers to swiftly add or remove servers as cloud service demand changes. Overall, the growing use of cloud computing has a ripple effect, resulting in an increased demand for data center rack servers. Cloud service companies use them for data storage, application execution, and computing.

For instance, in September 2023, Microsoft Azure revealed a key collaboration with NVIDIA to provide cloud services for High-performance Computing (HPC), leveraging NVIDIA's A100 and H100 GPUs. These services target enterprises and institutions seeking HPC functionalities for applications, such as Artificial Intelligence (AI), Machine Learning (ML), and scientific simulations, offering an alternative to building and managing their own data center infrastructure.

The high initial investment required for setting up a data center with rack servers is a significant barrier to the data center rack server market growth. Small & medium-sized businesses often have restricted budgets, making the initial expense of acquiring and deploying rack servers, as well as the necessary cooling and power infrastructure, a substantial hurdle. Startups frequently experience fast expansion, requiring scalable data center infrastructure. While rack servers provide scalability, the expenditure might be difficult for businesses in the early stages since they may not have a clear idea of their future infrastructure requirements. Organizations with limited IT resources may find it difficult to employ or educate additional workers to successfully manage the data center infrastructure due to the hefty initial expenditure, limiting product adoption.

Data Center Rack Server Market Trends

The data center rack server industry is witnessing significant technological advancement. Advancements in processor design, such as multi-core and cloud-optimized CPUs, allow rack servers to offer more processing power than prior versions. This enables data centers to handle more complicated tasks and process more datasets with greater efficiency. Developments in memory technology, such as DDR4 and the upcoming DDR5, are improving memory speed and capacity, resulting in quicker data access and better server performance. Rack servers can provide more storage capacity and quicker data transfer rates owing to advancements in storage solutions such as Solid-state Drives (SSDs) and Non-volatile Memory Express (NVMe). This is critical for effectively storing and accessing massive datasets, particularly for real-time analytics and AI/ML workloads.

For instance, in December 2023, Dell Technologies unveiled its improved version of PowerEdge XR11 server, tailored for edge computing implementations. It utilizes 12th Gen Intel Core processors to enhance performance and efficiency for edge-based tasks. It integrates NVIDIA RTX A100 Tensor Core GPUs, facilitating accelerated processing for edge-based AI and ML operations.

Data Center Rack Server Market Analysis

Data Center Rack Server Market Size, By Form Factor, 2022-2032 (USD Billion)

Based on form factor, the market is divided into 1U, 2U, 4U, and other. The 2U segment held around 37% market share in 2023 and is poised for significant growth over the forecast period. 2U servers are less bulky than bigger servers (4U and above), allowing them to fit into smaller data center facilities while lowering real estate expenses. As they are bigger than 1U servers, they can handle more powerful CPUs, memory, and storage than their smaller counterparts. This enables them to manage moderately demanding workloads efficiently. They utilize fewer materials and manufacturing resources than bigger servers, resulting in a reduced purchasing price. Their small size frequently translates into lower cooling requirements, minimizing the operational expenses connected with data center cooling systems. This cost-effectiveness makes 2U servers an appealing alternative for enterprises of all sizes, particularly those seeking a mix of performance and budget.

Data Center Rack Server Market Revenue Share, By Data Center, 2023

Based on data center, the market is categorized into tier 1, tier 2, tier 3, and tier 4. The tier 3 segment held a major market share of around 34% in 2023 and is expected to grow significantly. Tier 3 data center are meant to achieve 99.99% uptime, which means they experience fewer failures and ensure the ongoing functioning of key applications. This high availability is accomplished by using redundant power supplies, cooling systems, network connections, and server components. Tier 3 data center provide the highest level of reliability and minimize potential disruptions to businesses or organizations that rely heavily on continuous data access and processing, such as financial institutions, healthcare providers, and e-commerce companies. Tier 3 data center are fundamentally scalable, allowing organizations to simply expand or reduce server capacity as their needs change. This is especially important for firms that are rapidly growing or have fluctuating data requirements.

North America Data Center Rack Server Market Size, 2022-2032 (USD Billion)

North America dominated the global data center rack server market with a share of over 36% in 2023. North America has a huge and digitally engaged population, resulting in a steady increase in data output. This necessitates strong and efficient data center, making rack servers an essential component. Research institutions, universities, and businesses in various sectors, such as healthcare and finance, across North America require HPC capabilities, which rack servers efficiently support. The region is home to leading data center rack servers manufacturers, such as Dell, Hewlett-Packard Enterprise (HPE), Cisco, and Lenovo, contributing to a highly competitive and innovative market landscape. Overall, the North America market is expected to develop significantly, driven by increased data consumption, cloud adoption, and the requirement for sophisticated computing capabilities.

Data Center Rack Server Market Share

Super Micro Computer, Inc. and Dell Technologies hold a significant market share of over 3% in the data center rack server industry. Companies provides holistic data center solutions by combining rack servers with networking, storage, and virtualization technologies, offering complete infrastructure solutions for businesses. The company prioritizes converged and hyper-converged infrastructure solutions, highlighting its ability to streamline the setup, administration, and scalability of data center setups.

Moreover, Oracle Corporation offers rack servers as optimal solutions for handling critical database workloads, enterprise applications, and cloud-native tasks, benefiting from its proficiency in database management and application hosting. The company offers tailored configurations, performance enhancements, and workload-specific solutions designed for Oracle Database, Oracle Middleware, and Oracle Cloud applications.

Data Center Rack Server Market Companies

Major players operating in the data center rack server industry are:

  • Cisco Systems
  • Dell Technologies
  • Fujitsu
  • Hewlett Packard Enterprise (HPE)
  • Huawei Technologies Co., Ltd.
  • IBM Corporation
  • Inspur Technologies
  • Lenovo
  • Oracle Corporation
  • Super Micro Computer, Inc.

Data Center Rack Server Industry News

  • In August 2023, HP introduced the HPE ProLiant DL360 Gen11 server featuring the AMD EPYC 4th Gen processor, equipped with enhanced core density and performance capable of accommodating up to 96 cores per server, catering to high-demanding workloads.
  • In April 2023, IBM introduced enhanced flexibility, sustainability, and security to data centers through the latest offerings, IBM z16 and LinuxONE 4, available in single-frame and rack-mount configurations. Powered by IBM's Telum processor, these options prioritize sustainability, supporting highly efficient data centre operations. This enables clients to easily transition to a digital economy and address ongoing global uncertainties.

The data center rack server market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) and volume (units) from 2018 to 2032, for the following segments:

Click here to Buy Section of this Report

Market, By Form Factor

  • 1U
  • 2U
  • 4U
  • Others

Market, By Data Center

  • Tier 1
  • Tier 2
  • Tier 3
  • Tier 4

Market, By Data Center Size

  • Small and mid-sized
  • Enterprise
  • Large

Market, By Application

  • BFSI
  • Energy
  • Government
  • Healthcare
  • IT & telecom
  • Manufacturing
  • Others

The above information is provided for the following regions and countries:

  • North America
    • U.S.
    • Canada
  • Europe
    • UK
    • Germany
    • France
    • Russia
    • Italy
    • Spain
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • South Korea
    • ANZ
    • Southeast Asia
    • Rest of Asia Pacific 
  • Latin America
    • Brazil
    • Mexico
    • Argentina
    • Rest of Latin America 
  • MEA
    • UAE
    • South Africa
    • Saudi Arabia
    • Rest of MEA


Authors: Preeti Wadhwani

Frequently Asked Questions (FAQ) :

Industry size for data center rack server was USD 68.5 billion in 2023 and is anticipated to witness over 13% CAGR between 2024 and 2032, due to the ever-growing volume of data generated by individuals and businesses.

The 2U form factor segment held 37% of the data center rack server industry share in 2023 and is poised for significant growth till 2032 owing to the higher need to handle more powerful CPUs, memory, and storage than their smaller counterparts.

The tier 3 segment recorded 34% of the data center rack server market share in 2023, due to fewer failures to ensure the ongoing functioning of key applications.

North America market for data center rack server accounted for over 36% revenue share in 2023, led by the steady increase in data output in the region.

Data Center Rack Server Market Scope

Buy Now

Premium Report Details

  • Base Year: 2023
  • Companies covered: 20
  • Tables & Figures: 300
  • Countries covered: 24
  • Pages: 260
 Download Free Sample