Data Center Rack Server Market Size

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.

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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.