The Total Addressable Market (TAM) for Data Center Storage was valued at USD 50.24 billion in 2022. It is estimated to reach USD 74.02 billion by 2031, growing at a CAGR of 4.4% during the forecast period (2023–2031).
Data centers are designed and developed as mission-critical facilities to process the data generated by consumers and business end-users. Data centers connect consumers and businesses through fiber optic cables via telecommunication broadband connectivity or satellites. Data centers comprise IT infrastructures such as servers, storage, and network infrastructure connected to process and store user data. This infrastructure is critical for adequate data center storage.
Data centers also comprise power and cooling infrastructure to offer high availability, reliability, and scalable services to end-users. Building data centers require thousands to billions of dollars, depending on their location, size, and capacity. The market for data center storage includes hard disk drives, solid-state drives, storage networking, and other types of infrastructure.
|Market Size||74.02 billion|
|Fastest Growing Market||Asia Pacific|
|Largest Market||North America|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|
Positive Impact of COVID-19
There is a greater focus on connectivity and business contingency plans for remote work as a result of the COVID-19 pandemic. As businesses continue to grow, data centers will expand and adjust to meet the growing connectivity demands across various industries. Businesses increasingly rely on hybrid infrastructure and cloud capabilities as they look for flexibility, scalability, and remote work capabilities. In addition to increasing internet traffic, businesses' use of collaborative software is also increasing. An increase in cloud storage and teleconferencing services led to more businesses becoming accustomed to working remotely.
Data centers support companies with their data storage requirements. In addition, there is an increased emphasis on business continuity and Disaster Recovery as a Service (DRaaS), which will drive storage demand further. As a result of the rise in SaaS providers, cloud storage adoption has increased, allowing cloud service providers to further diversify their product offerings. Cloud operators such as AWS, Google, and Microsoft are further expanding storage infrastructure to enable efficient cloud-based workflows, thereby contributing to the market's growth.
Impact of IoT and Big Data
The increase in internet speed and the growth in internet users have led to a massive generation of data and increased social media penetration over time. Several industries, such as healthcare, BFSI, education, and hospitality, are experiencing data growth due to technological advancements and digital transformation initiatives. The Internet of Things (IoT), which connects the digital and physical worlds using a network of sensors, contributes to the fast development of data traffic. Implementing 5G networks for mobile devices will aid the exponential growth of IoT and big data analytics during the forecast period.
Additionally, the adoption of IoT will help data center operators manage and monitor their data centers efficiently without being physically present at the facility. Smart bots are one example of a technology that can be used to manage tasks where a human is not necessary, helping expand the market.
Supply Chain Shortages
The supply chain plays a vital role in ensuring the resilience of data center infrastructure. In 2020, due to the outbreak of COVID-19, the market witnessed supply chain-related challenges for infrastructure providers. During the initial COVID-19 lockdown, the construction of data centers was halted in a few locations around the world, with long-term recovery implications. In addition, development activities had to continue with fewer employees and stringent measures for the safety of staff members. Interruptions in product or service delivery can lead to supply chain interruptions and product downtime during the lower production stages, thereby hampering market growth.
Growth of Edge Due to Adoption of 5G
Data center development is focused on prominent cities, whereas the development of data centers is still relatively nascent in tier 2 and tier 3 cities. However, due to the growing adoption of technologies in smaller locations farther from central locations, these regions are also gaining traction in edge data center deployments. The growth in 5G is fueling the growth of edge deployments due to increased connectivity options with established hyperscale data centers. Edge data centers will develop a decentralized architecture in which numerous edge data centers are linked to a single hyperscale facility.
Edge is where real-time data is received, generated, processed, and transferred between users and applications. As more applications move into the cloud at tremendous speeds, improving performance and reducing operational and maintenance costs have become essential, which can be done if solutions are present at the edge. Edge data storage and processing enables organizations to manage, process, and analyze growing data worldwide at a reduced cost and lower latency. Thus, the growth of edge due to the adoption of 5G creates opportunities for the global data center storage market to grow.
By region, the global data center storage is divided into North America, Asia-Pacific, Europe, Latin America, and the Middle East and Africa.
North America Dominates the Global Market
North America is the most significant global data center storage market shareholder and is anticipated to grow at a CAGR of 2.56% during the forecast period. North America is the most mature data center development and operations market. The US and Canada are witnessing significant investments from global data center operators and cloud service providers. In addition, the North American data center market is growing because IoT and 5G are becoming more popular, the growing COVID-19 pandemic, and people's desire to stream online entertainment at high speeds. Increasing data traffic has created additional demand for developing many data centers that support data generated by businesses and consumers. The use of cloud computing services and applications will continue to grow in North America, further developing large hyperscale cloud-based data centers.
Asia-Pacific is expected to grow at a CAGR of 6.81% over the forecast period. Asia-Pacific has been and will continue to be the preferred cloud service and global colocation provider market. The market in Asia-Pacific is witnessing steady growth with continued investments from AWS, Microsoft, Alibaba, and Facebook. Government agencies across several countries in the Asia-Pacific are also actively involved in developing data centers to digitalize their operations. The rising demand for on-demand video, mobile gaming, and online content will be vital for the region's IT infrastructure procurement.
The Latin American data center market has been attracting significant investments in recent years, led by countries such as Brazil, Chile, Colombia, Mexico, Bolivia, and Argentina. All countries in Latin America will see more and more installations of submarine network connectivity, leading to higher data center development driven by efforts from government agencies, telecommunication service providers, and utility providers. The significant factors that drive service providers to develop data centers in the region are solid fiber connectivity growth, power supply reliability, and high demand for data center services from industries such as BFSI, IT, and healthcare.
The Western Europe data center market is mature regarding technology penetration, technological innovations, and data center investments. The growing investments from cloud and colocation service providers drive the market's growth. Investments in data center construction across Frankfurt, London, Amsterdam, and Paris (FLAP) and Ireland's data center markets in Western Europe have grown significantly. These markets have been the largest in terms of IT infrastructure procurement. The operators of hyperscale data centers are quickly expanding their cloud platforms across Western Europe. Also, Brexit might have a higher impact on data centers across other Western European countries during the forecast period.
The Central and Eastern Europe data center market is among the emerging development and operations markets. The COVID-19 pandemic, the development of 5G networks, the rise in popularity of IoT, the demand for high-speed streaming of online entertainment content, and other factors are the main drivers of the Central and Eastern Europe data center market's expansion. Increasing data traffic has created additional demand for developing many data centers that support data generated by businesses and consumers. The use of cloud computing services and applications will continue to grow across countries in Central and Eastern Europe, leading to the further development of large data centers.
The global data center storage market is segmented by storage architecture, storage type, and end-user.
By storage architecture, the global data center storage market is divided into NAS, SAN, and DAS.
The NAS segment is responsible for the largest market share and is anticipated to grow at a CAGR of 5.42% over the forecast period. NAS allows file-level access to data and utilizes the existing IP network for data transfer. NAS utilizes protocols like NFS (Network File System) and CIFS (Common Internet File System). The use of NAS is declining compared to SAN in the data center environment. The introduction of all-flash storage in NAS systems is relatively small for the market. However, it is used for particular cases, such as video-on-demand, rather than critical applications, such as databases and business analytics. Features such as efficiency, ease of access, and low cost attract vendors. It is estimated that around 70% of enterprise and mid-market companies worldwide use NAS for increasing capacity at some storage tiers, compared to other storage types such as SAN (Storage Area Network) and DAS (Direct Attached Storage).
Based on how it connects, SANs such as FC SAN or iSCSI SAN allow access to data on a block-by-block basis. FC SAN enables the communication between the server and the external storage system at a speed of 2−32 Gbps. The iSCSI SAN communication is achieved over the Ethernet network (1−100 GbE). In terms of cost, FC SAN is more expensive than iSCSI SAN, thus resulting in the emergence of the Fiber Channel over Ethernet (FCoE) technology. It enables FC SAN to use the existing Ethernet network for communication through specialized network adaptors. FC technology has been predominantly used for over a decade. However, iSCSI has also been gaining traction among data center operators recently.
By storage type, the global data center storage market is segmented into traditional storage, all-flash storage, and hybrid storage.
The traditional storage segment owns the market and is expected to grow at a CAGR of 2.31% over the forecast period. Traditional storage includes devices that support only HDD (Hard Disk Drives). The hard disk drive (HDD) is a non-volatile data storage device, indicating that data stored on these drives will be retained even after the system is powered down. HDDs offer higher capacities at comparatively affordable prices despite having much slower speeds than SSDs. In addition, IDC says that by 2025, about 175 zettabytes of data will be made every year around the world. The data produced in the current scenario calls for storage systems with higher capacities to cope with the inevitable growth of data. There is an urgent need for data center development and procurement of IT infrastructure and traditional storage devices such as HDDs to support this data storage requirement.
All-flash helps to store data for long periods using flash memory, which is non-volatile memory. All-flash storage is widely used in SMEs or large businesses as storage systems. It comes in a wide range of formats applicable for different storage purposes. As it has no moving parts, it consumes less power and is often called "solid-state storage." It differs for drives with moving parts, such as HDDs, and can exhibit swift response times. The data center market worldwide is witnessing significant investments from cloud service providers. In addition, companies are migrating workloads from on-premises to the cloud. Flash storage provides a cost-friendly way for organizations in sectors such as BFSI, government, and healthcare to transfer and access data at high speeds required for applications such as real-time streaming/monitoring, online transactions, diagnosis, machine learning, IoT, and others.
By end-user, the global data center storage market is segmented into the cloud/IT sector, the BFSI sector, the government sector, and other sectors.
The cloud/IT sector segment is the highest contributor to the market and is expected to grow at a CAGR of 5.95% during the forecast period. Cloud service providers have been gaining traction across the world with the rising interest of governments and businesses in shifting data to virtual servers. Cloud service providers have started developing self-built data centers and colocating data centers to store increasing volumes of data worldwide. The IT and telecom sector is among the fastest-growing sectors worldwide, with a rising number of mobile and internet users. The IT and telecom sector is majorly connected to the data center market. The daily data traffic from the sector makes it a significant market for data center operators. Telecom and IT infrastructure market players often develop or colocate telecom data centers. With the growing transformation in the functional design of IT and telecom companies, the data center market is growing to cope with the demand for flexible and efficient storage systems.
BFSI (Banking, Financial Services, and Insurance) is among the rapidly growing market technologically. There have been significant developments in the industry in terms of technology, such as the digitalization of services. The growing number of customers and increased online services have led the BFSI sector to shift data online, because of which the demand for data centers has increased in the sector. Factors such as the rise of COVID-19, the increasing need for ease of doing business, and growing security concerns for data are some driving forces for the growth in demand for data centers in the BFSI sector. The growing need for operational efficiency and digital transformation has increased technology penetration in the sector.
The key players in the global data center storage market are