The latest CONTEXT forecast reveals mixed fortunes for enterprise
server and storage versus networking markets in 2024. We anticipate
that the former will experience year–over–year (YoY) revenue growth in
the upcoming year due to a probable refresh cycle, potential interest
rate reductions and a rise in component prices. But networking sales
are likely to slump on the back of tougher YoY comparisons.
Overall for 2024, CONTEXT predicts a range of -0.4% to 7.6% revenue
growth in servers, versus -22.2% to -19.4% in 2023. In storage, it’s a
similarly positive picture: 2024 will see growth between -0.2% and
7.7% versus -8.2% to -5.6% in 2023.
There are several reasons for our optimism. Although strong Q4 2022
and Q1 2023 performance will negatively impact revenue growth
comparisons in the coming two quarters, things will soon improve. It
is certainly true that following the 2023 downturn, the cost of SSDs
and RAM will bring greater revenue in the following year.
Meanwhile, a server refresh cycle is due in 2024–with newer, more
energy–efficient platforms incentivising businesses to upgrade their
datacentre infrastructure to reduce costs and emissions. AI–centric
platforms may also be a draw for IT buyers keen to renew their server
fleet. Finally, we could see a boost in spending in Poland as EU funds
are unblocked following the election of a more liberal administration.
And expected interest rate declines should also spur business
investment later in the year.
Networking revenue sales through distribution have been strong since
the end of 2022, driven by Wi–Fi 6 investment and backlog going
through, following component shortages. However, YoY comparisons will
mean significant revenue declines until at least Q2 2024. We’re
predicting a range of -10.2 to -1.3% YoY revenue growth for 2024,
versus 10.9% to 13.1% for 2023.
A reduction in office space next year will further hit performance
due to hybrid working, which will hit switching sales–even as it spurs
investment in cloud and networking software. Networking appliance
prices peaked at the start of 2023 due to component shortages, and
these are expected to decline, dragging down prices, especially in the
switching segment next year. However, there is some light at the end
of the tunnel. Wi–Fi certification in mid–2024 may drive appliance
sales, while interest rate cuts may encourage more business investment
in the second half of the year.
To access the full forecast, please request the report here.
© CONTEXT 2024