“The slowdown in general-purpose server and storage deployments weighed down the market despite increased AI-related investments,” Fung said. “While Microsoft, Google, and Oracle have increased their data center investments in 2023 year-to-date, other cloud service providers such as Amazon and Meta have trimmed their data center capex.”
However, Fung added that Dell’Oro’s “outlook for 2024 is more optimistic” due to the advent of emerging AI applications.
“New AI applications such as generative AI will be a key investment driver in the cloud and enterprise,” he said. “Furthermore, we anticipate demand for general-purpose servers to recover following a prolonged correction and as customers transition to new server platforms that enable more efficient computing.”
Varying vendor patterns
On the vendor front, the forecasts are diverse.
Dell’Oro forecasts server and storage system revenue to grow more significantly than 20 percent in 2024, while network and physical infrastructure revenues will grow by single digits.
Dell led all OEMs in server revenue in the third quarter, followed by IEI Systems (formerly Inspur) and HPE. Finally, white box server vendors gained 8% of revenue share year-over-year compared to the OEMs.
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