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MEA enterprise hardware market sluggish, poised for change

IDC reports year-over-year growth rate of 3.8% as focus shifts to efficiency

MEA enterprise hardware market sluggish, poised for change
The MEA region's x86 server market witnessed a 3% year-on-year increase in value, but a 6.4% decline in unit terms

The Middle East and Africa (MEA)'s enterprise hardware market, including servers and external storage, saw a growth rate of 3.8% year-over-year in the third quarter of 2014, according to IDC, which described the market expansion as sluggish.

Describing the MEA enterprise hardware market as remaining in a passive growth state, IDC said that third-quarter revenue last year totalled $522.9m, with much of the growth being spurred by infrastructure deals within the oil & gas, telecoms and government verticals. But IDC predicted that the market will take a new direction in terms of infrastructure investment in 2015.

"We are expecting to see a shift in focus toward efficiency and consolidation, with demand moving from volume products to value products," said Swapna Subramani, research manager for systems and infrastructure solutions at IDC Middle East, Africa, and Turkey.

For example, the MEA region's x86 server market witnessed a 3% year-on-year increase in value, but a 6.4% decline in unit terms during Q3 2014, IDC said.

"The dynamics of server adoption within enterprises has seen a major shift in the past six to eight quarters," said Subramani.

"Enterprises are now looking at consolidated and converged infrastructures with the focus shifting from boosting server capacity and volumes to optimising the server installed base and enabling cloud technologies. As such, the growth seen in the x86 server market's value, and the corresponding decline in volume, can be attributed to the increased adoption of virtualisation technologies that utilise fewer server units than is the case in traditional data centres."

Meanwhile, the region's external storage market witnessed a "robust" growth of 13.9% year-on-year in the third quarter of 2014, IDC said. Subramani said that this was because data centre investments are shifting from being so server-centric. She predicted that the external storage market could continue to grow at a faster rate than the server market over the coming years.

"The storage market is witnessing increased uptake of entry-level and midrange storage devices driven by demand for the NAS protocol," she explained.

"High-end storage devices actually saw a sharp decline in shipments in Q3 2014, validating the overall market movement into more cost-optimised, scalable solutions that can be adapted to third platform technologies such as cloud, big data, mobility and social."

The UAE's enterprise hardware market witnessed strong growth of 32.7% in Q3 2014, with telecoms and government spending accounting for the majority of the growth, IDC said. Saudi Arabia's growth was more subdued at 5.1% year on year, with a decline in the server market offset by strong growth in the external storage market.

The enterprise hardware market in other GCC countries witnessed a 1.8% decline in Q3 2014 compared to the same quarter last year. IDC attributed this decline to a decline in server shipments in the region as the external storage market registered solid double-digit growth.

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