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How the Data Center Market Is Faring During the Pandemic

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The coronavirus outbreak has affected the lives of a million people all over the world. It has changed the fate of various industries. While the pharmaceutical industries are faring well, the entertainment or hospitality industry has faced a significant slowdown.

What about the fate of the technology industry?

 

According to reports and news, Hewlett Packard Enterprise (HP), Dell Technologies, IBM, and various other industry leaders announced cost-cutting measures and laid off multiple employees to meet up with their losses. All the companies have faced a slump in demand due to the covid pandemic.

 

Dell was forced to halt 401(k) contribution matching and froze raises. HPE, on the other hand, announced that it would be cutting jobs, change their products, support as well as marketing and real estate strategies. IBM too did job-cuts in thousands. 

 

Data centers, on the contrary, have some other news. They have reported a good solid result for the first quarter of the year. If that wasn’t enough, it yet has expectations to grow steadily for the rest of the year too.

 

While the biggest software and technology companies are struggling to keep up with business, what makes data centers operating only because of the data provided by these companies are working perfectly fine?

 

Big companies like HPE, Dell, IBM cater to not only data center services but also to other vendors. While the data center infrastructure has proved to be profitable during the pandemic, the other areas are slacking behind.

 

Lately, data centers operators have shifted their business around serving mainly cloud platforms. This includes not only the hyperscale ones but also ‘two-tier’ and ‘three-tier’ cloud providers. The smaller tiered ones operate by specialing in particular services and compete with the bigger giants. They also build and maintain services for traditional companies that don’t have an inhouse tech-team.

 

Due to the covid pandemic, people are opting for cloud adoption and hence will only increase the growth of data centers. Various American IT vendors who are traditional lost much of their hardware market to Asian markets years ago. Though some of them yet own the lower-tiers and cloud-provider market. The traditional companies are mainly responsible for adding on to the revenue of data centers.

 

According to a NAIOP survey released in July, the industrial sector followed an upward trend in new development/redevelopment and building acquisitions.

Industrial building acquisitions continued to post significant gains, according to the NAIOP survey. More than 90 percent of the respondents observed that there was more building acquisition activity in July, compared with around 70 percent in June. In the April-May period, survey respondents said industrial building acquisitions were in the 50-percent to 60-percent range.

Demand for cold-storage facilities also continued its upward trajectory, given a significant lift from grocery stores, restaurants and other food establishments requiring more space to store frozen food to meet consumer demand for home delivery and take-out orders during the viral outbreak.

Enterprises have either shifted their spend on on-prem data centers to the cloud or are considering it yet.

 

CyrusOne, which operates data centers in the US and Germany, continues to provide customer access to all its facilities, “subject to certain pre-screening questions,” Anrea Munoz, CyrusOne’s VP of operations and customer success, told DCK via email.

Its tenants in Germany are hyperscale cloud platform operators, which use their own onsite teams, and “suspending all customer access has the potential to compromise their ability to maintain critical services,” she said in response to the question why CyrusOne hasn’t taken the same measures Equinix has in that country.

According to a research conducted by Omdia, the COVID-19 pandemic will increase demand for everything from IT hardware and software to power supply, cooling(air conditioning) and physical infrastructure gear for cloud service provider data centers. According to this, they put out a list of headwinds and the tailwinds that data centers should expect from this pandemic.

 

It is also expected that demand by enterprise data centers will be down substantially for the next six months to two years.

 

For any news related to the technology and computer system industry, check Legrand. They offer a wide range of networking equipment and materials.

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