Market Trends of China Data Center Storage Industry
IT & Telecommunication Segment to Hold Major Share in the Market
- Chinese smartphone companies are offering affordable smartphones with high-end features, leading to an increase in the number of smartphone users in the country. Around 50% of users replace their phones every 12-18 months, forcing companies to innovate their phones frequently. This increase in the number of smartphone users has positively impacted the growth of the data center market in the country. During the study period, when the number of smartphone users increased fivefold, the number of racks in data centers increased from around 70k in 2017 to 280k in 2021. This trend is expected to be witnessed during the forecast period as well. The increase in the number of data centers is directly related to the demand for storage devices in IT infrastructure. As the number of data centers increases, more storage devices are required to meet the growing computing needs.
- In 2022, internet use via smartphones in China was 99%, while via laptops and personal computers was 35% and 33%, making smartphones a primary mode of easy internet access. The weekly online screen-on time individually increased by 2.5 hours from 26 hours in 2020 to 28.5 hours in 2021. The growing demand for streaming services, online gaming, financial services, and social networking and the adoption of smart home automation applications have increased data consumption over the years. This data consumption positively impacts the increase in the number of data centers. As the number of data centers are increasing, more storage devices are required to meet the growing computing needs.
- Data centers are critical to national security, internet infrastructure, and economic performance. The country is experiencing rapid growth in its data center infrastructure, driven by a growing preference for the cloud and increased consumption and generation of data by increasing digital users. This increases the usage of data centers, and at the same time, increases the usage of storage devices in data centers, thus positively impacting the market.
- Increased internet penetration, increased use of social networks, improved automation technology, smart city initiatives, and implementation of AI across industries are driving investment in data centers. As the number of data centers increases, so does the demand for data center storage in the country.
- In 2020, during the 14th Five-Year Plan Period, the Ministry of Industry and Information Technology announced a target of achieving 100% 5G availability in the urban regions and 80% in the rural regions by 2025. In 2022, China deployed 1.1 million 5G base stations, covering all cities, 97% of towns and 40% of villages, with a stable 5G network. It is expected to provide last-mile 5G connectivity in the country, boosting the growth of 5G during the forecast period. An increase in the penetration rate of the 5G network in the country is expected to lead to an increase in data generation, which may raise the need for more space for storing and processing these data. The need for more data processing and storing is expected to raise the occupancy rate in data centers in the coming years. As the number of data centers increases, more storage devices are required to meet the growing computing needs.
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Hybrid Storage Expected To Hold Significant Share
- The combination of on-premises and cloud storage solutions is known as data center hybrid storage. This approach takes advantage of the best of both environments and provides the flexibility to store and manage data on-premises and in the cloud.
- Users opt for cloud services due to increased scalability, wherein they can increase the number of networks, storage, and servers based on the business requirement. For instance, during festivals such as China Singles Day, the attractive offers listed by the websites entice huge amounts of website traffic and financial transactions, which are easily managed, and the cloud infrastructure ensures performance. This increases the need for cloud services in the country. The increase in cloud functions, in combination with on-premise storage, enables efficient storage that helps to effectively utilize storage, reduce overall storage footprint, and optimize storage management. The growing demand for agile, cost-effective, and flexible computing is driving the demand for hybrid storage in the country.
- Initiatives such as the 14th Year Plan initiated by the Chinese government aim to promote digitalization services by encouraging research in 6G and integrated circuits and artificial intelligence in China. As part of digitalization, the adoption of technologies such as big data and IoT by SMEs has led to a significant increase in the procurement of all-flash and hybrid array systems.
- As businesses continue to grow, data centers are expanding and adapting to meet the growing connectivity needs of various industries and the increasing use of mobile internet. Businesses are increasingly relying on hybrid infrastructure and cloud capabilities as they seek flexibility, scalability, and remote work capabilities. The data traffic is also increasing the need for storage for businesses, thus boosting the market value for hybrid storage solutions.
- Several service providers are deploying advanced storage solutions to ensure data availability and access in hybrid clouds. The companies are offering optimized hybrid storage systems. For example, HPE GreenLake, an updated app and data product, also introduced platform upgrades and new cloud services in 2022. Therefore, this product portfolio is adopted by large enterprises with large data storage capacities. This demands hybrid storage capacitites in the country.
