Data centers now more than ever represent foundational infrastructure critical to supporting all things digital. Emerging technologies such as Cloud, IoT, and AI would not be seeing the innovation nor rates of adoption without the ability for data centers to support the massive appetite for lower latency and more capacity. While headwinds remain due to ongoing supply chain constraints and key component shortages, the second half of 2021 is poised to see strong expansion as economies rebound and critical technologies needed for new construction begin to normalize.

2021 Data Center Ecosystem First Half Performance

Looking at 1H performance as reported in NPD’s monthly Data Center Ecosystem Report, combined hardware and software revenue increased by 4% overall for the first half with software representing 54% of total revenue. Software continued to outpace hardware in growth, increasing by 8% vs. 1% growth for hardware. 

Looking at each of the core elements within the broader ecosystem, compute represented the largest percentage of total revenue. Within compute, hardware underperformed for the half, declining by 7% year over year, with software delivering better results despite declining 1%. While hardware suffered as a result of component shortages, software sales were driven by strong growth within business intelligence and data base system deployments, as companies looked beyond networking and security.

Networkingperformance saw 7% growth with software up 16% driven by monitoring and management. Hardware was up 1% with bright spots in switches and storage area networksup 2% and 8%, respectfully.

Storage saw a strong first half up 7% with software outpacing hardware 53% revenue share vs. 47%. SSD’s, and HDD’s saw mid-single digit growth with expectations for accelerated demand poised for the second half of the year. Network attached storage also saw significant growth with revenue increasing by 15% becoming the second fastest growing subcategory within storage hardware.

Security continued to perform well with hardware increasing by 8% and software by 9%.

While only representing 1% of total revenue, power reflected double digit growth driven by racks, mounts, and chassis, which represent over 60% of total power hardware.

Looking Ahead

With record demand for data usage, streaming services, and improved connectivity, expectations remain strong for the second half and beyond. Areas providing accelerated growth include the following:

  • Power of edge computing: Smart technologies and the increasing need for low latency performance will continue to help accelerate Edge micro data center growth and expansion. Smart devices, smart cities, and autonomous vehicles will continue to drive the need for large amounts of data to be processed real time.
  • Digital transformation 2.0: Industries that have embraced digital transformation via the Cloud are now driving adoption and expansion of Hyperscale and Colocation facilities enabling more scalable, agile driven solutions – increased adoption will continue to help fuel expansion.

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