COVID-19 Thought Leadership Strategy
Despite the fact that markets for legacy systems, such as physical servers and storage devices, are facing a decrease in sales due to the COVID-19 pandemic, research indicates that overall demand for storage will increase. As consumers are forced to stay home and many businesses must shutter or limit their physical operations, demand for online services, such as e-commerce and remote collaboration, is increasing. This rise in demand is leading many companies to switch their platforms and information storage to cloud-based systems, leading to growth in the cloud storage industry as legacy storage sales decline.
Trend #1 — Decline in Sales for Physical Servers and Storage
- Gartner, a business research and advisory company, released a report in March stating that, despite strong growth in 2019, the global server market faces significant uncertainty in 2020 due to the impact of COVID-19.
- According to a recent report from IDC, a global market intelligence firm, year-over-year sales for both enterprise storage and servers are expected to decrease by 5.5% and 3.4%, respectively.
- IDC anticipates that the server market will experience an 11% year-over-year decline in 2020's first quarter, followed by a 9% decrease in the second quarter, followed by renewed growth in the year's third and fourth quarters.
- Similarly, year-over-year storage sales are expected to drop 7% in the first quarter and 12% in the second, also followed by a modest return to growth at the end of 2020.
- IDC's Research Director of IT Infrastructure, Kuba Stolarski, expects that COVID-19 will have a dampening effect on overall IT infrastructure spending as businesses are forced to conserve.
- Stolarski notes that, while significant losses may be realized in the short-term for infrastructure and storage spending, it is likely that cloud platforms will lead the way to a "robust recovery".
Trend #2 — Businesses Facing Increased Storage Needs
- Gartner's Vice President Analyst, Craig Lowery, predicts that organizations may face the need to scale up their remote storage capacities amid COVID-19 to accommodate increases in employees working remotely or running workloads on public cloud systems.
- Lowery notes that reduced staff at physical data centers may also contribute to the drive for cloud-based storage.
- In mid-March, Forbes reported data revealing that broadband consumption during standard business hours has increased by more than 41%, indicating a surge of growth among those relying on data infrastructure for business and employment.
- Recent reports from Nielsen show that COVID-19's spread has contributed to a rise in consumers embracing the relative convenience and security of online shopping, with especially significant increases among older shoppers.
- Nielsen's forecast of "exponential growth" in demand for e-commerce options among consumers suggests a pressing need for businesses to respond by improving and expanding their legacy storage capabilities.
Trend #3 — Businesses Switching from Legacy to Cloud-Based Storage Systems
- Emil Sayegh, President and CEO of Ntirety, a cloud services provider, writes for Forbes that the restrictions brought on by COVID-19 have encouraged more companies to recognize the value of cloud-based systems.
- The most recent IT spending forecast from Forrester, a market research firm, showed few positive growth indicators aside from that for demand in cloud infrastructure services in the coming months.
- Craig Lowery of Gartner states that businesses managing their own infrastructure may soon realize their limits as online traffic surges in the face of COVID-19, potentially being forced to turn away customers or realize degradation in services because of limited legacy storage capacity.
- Lowery also suggests that organizations that previously based their infrastructure in public cloud services may be better positioned to deliver additional capacity due to the scalability of the cloud.
- A March 28 press release from Microsoft seems to confirm these trends, with officials acknowledging that they have been forced to throttle certain "non-essential" cloud services to meet consumer demand and give priority to health-related workloads among the COVID-19 outbreak.
- Microsoft also stated that it is implementing certain temporary restrictions to balance the needs of its Azure customers, including by limiting free offers and other resources for new subscribers in order to give priority to existing subscribers.