India's server market to get Reliance Jio push; IDC expects 20% growth

India’s server market, says research firm IDC, should see 20 per cent growth in the current quarter (July-September), with Reliance Jio, Adani Enterprises, Hiranandani Group, L&T and Shapoorji Pallonji announcing plans to enter the space.

A server is the term for a computer program or device that accepts and responds to requests made by another program. “The impact of various domestic data centre players would be felt in Q2 (this quarter) and the later half of the year as well. Investments from Reliance would have immediate impact on the server market at the end of Q2. We are unclear about the Adani Group data centre investment plan. We are expecting QoQ (quarter-on-quarter) growth of 20 per cent for the x86 server market at the end of Q2,” said Harshal Tarkeshwar Udatewar, market analyst for servers at IDC India. The x86 server is largely deployed at traditional data centres, followed by private and public cloud providers. 

This is good news for the overall server market in India, which saw a year-over-year (YoY) decline of 16.2 per cent in revenue to reach $298 million in Q1 (April-June) from the same period a year before, according to the latest IDC Asia/Pacific Quarterly Server Tracker. 

Over the next three years, say sector experts, $7.1 billion (Rs 50,000 crore) would be spent in India on cloud infrastructure, the lion’s share of which would be to buy servers. They also believe these plans of large conglomerates would help in considerably bringing down prices. Which would help a host of smaller companies to host their data on cloud.

“Initiatives from Reliance, Adani and Hiranandani will help many small and mid-size companies to host data locally, helping them perform better and provide better services to their customers, at a fraction of the original price. Although the demand for servers will increase, it is difficult to say by how much. The exact number depends upon the business plans of enterprises and the market share they want to address. General predictions lie between 9 per cent and 14 per cent for various data centre products for 2019 and 2020,” said Anjani Kommisetti, country manager at Raritan & Servertech. 

Experts attributed an earlier decline in the Indian server market to the absence of multi-million dollar deals from the information technology (IT) and IT-enabled services sectors. 

“Decreasing use of the x86 server by players in the IT sector is also a contributing factor, as these were traditionally used by IT firms for hosting and testing in-house applications, an activity that is increasingly being shifted out to cloud spaces. As more businesses shift their data to cloud infrastructure, opportunity for Indian server providers will grow. This is supported by a report by 6Wresearch, where the India edge server market is projected to grow at a compounded annual rate of 6.4 per cent during 2018-24,” said Vivek Sharma, managing director, Lenovo DCG India. 

The government’s push for data localisation has started showing its effects in the financial technology space. It is set to expand to other areas as well, as the demand for localising of citizen data across the board picks up pace. “The requirement for most of compute and storage is mostly of the on-demand kind. To meet these on-demand requirements, data centre providers and cloud infrastructure providers will become more and more relevant. Cloud initiatives are a necessity today to meet the exponential requirement of on-demand compute and storage. This has led to enormous capacity building through data centres,” said Rajarshi Bhattacharyya, country manager, SUSE India.

Experts believe there is going to be a huge influx of local and international players setting up own data centres in India. “Apart from tier-1 cities, you will see tier-2 cities also coming up with large data centres. International players like Bridge Data Centres and Colt have already started investing in India. Players such as L&T, Shapoorji Pallonji and organisations in the traditional construction business will also make inroads in this space. Indirect investment will be huge in terms of technology and automation as well. India is the fastest-growing region in data centres within the Asia-Pacific territory,” added Kommisetti.

However, IDC expects a decline of one per cent this calendar year, due to lack of investments from global cloud service providers. “As far as local players entry in the data centre market is concerned, we would not have an effect on the x86 server market, as the volume of servers they will buy would be lower as compared to global cloud service providers. Also, they would be cautious while investing and would have their major play in infrastructure as a service,” he added.