According to IDC, Worldwide Enterprise External OEM Storage Systems Market Spending Expected to Reach $37 Bn USD by 2026
After starting a year with 2% year over year growth in 1Q22, the external ESS market grew 9% year over year in 2Q22, however, regional performance was varied significantly from double-digit growth in North America and Western Europe to double-digit decline in Japan and Central and Eastern Europe (CEE). Supply chain disruptions, Russia-Ukraine war, inflation, and worries about global recession continue to shape market demand and vendor ability to serve this demand. IDC research suggests that while inflation is a major source of concerns for infrastructure buyers, they will continue to invest in infrastructure purchases in near term to complete projects that already started but can postpone or reconsider future investments.
To modernize or refresh their infrastructure, and/or invest in new initiatives, buyers are incorporating multiple strategies to mitigate inflationary pressures including increasing budgets, purchasing less functional cheaper systems, and adopting services-based consumption of IT resources. As the supply chain situation is improving, system shipments toward backlogs accumulated over several quarters starting to clear adding to revenue growth. This trend is expected to continue in the next few quarters. Overall, the supply chain is expected to recover in late 2022 or early 2023.
While most regions continue recovering from the COVID-19 pandemic easing the restrictions and opening borders, the impact of the pandemic isn’t over yet as some countries (most notably, China) continue imposing occasional lockdowns. These lockdowns in regions with heavy concentration of manufacturing facilities and transportation hubs may add to delayed recovery of the supply chain.
The war between Russia and Ukraine continues impact the market in both direct and indirect ways. In the most direct way, system sales in Russia and Ukraine collapsed in 2Q 2022 and will continue declining driving the decline in the overall CEE region. Indirectly, the war added to already growing energy prices and transportation costs, which have a rippling impact on the IT industry, especially on regions which historically relied more on energy resources from Russia. Cutting energy supply worsens already declining consumer and business confidence and recessionary pressures.
Overall, the storage systems market proved to be more resilient to the negative forces than some other IT segments due to continuous business digitization which relies on data. However, macroeconomic, and geopolitical environments represent a growing concern and while IDC still expects for the storage systems market to grow in 2023, expectations on rate of growth got reduced compared to the previous forecast across most regions.