Market Trends of India Data Center Server Industry
IT and Telecom to Hold Significant Growth
- The demand for data center servers in the IT and telecom industry is rising with increasing network traffic. Telecom data centers are responsible for managing network resources, such as vRAN and 5G packet core, while IT data centers are responsible for the IT applications used by the telecom service. While telecom data centers historically provide connectivity through a traditional and monolithic platform, they now offer a variety of services in an environment that meets the requirements for availability, scalability, security, and performance.
- Currently, India is the world's second-largest telecommunications market, with a subscriber base of 1,170.75 million in January 2023, and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute substantially to India's Gross Domestic Product (GDP). The Tele-density of rural subscribers reached 57.71% in March 2023. From around 4,200 petabytes in 2018, India's overall wireless internet data usage has increased by almost 7 times to 32,397 petabytes in 2021.
- The industry's exponential growth over the last few years is primarily driven by affordable tariffs, wider availability, roll-out of Mobile Number Portability (MNP), expanding 3G and 4G coverage, evolving consumption patterns of subscribers, Government's initiatives towards bolstering India's domestic telecom manufacturing capacity, and a conducive regulatory environment. To further expedite digital connectivity, the Government has approved the auction of IMT/5G spectrum for deployment of 5G services within the country. This auction was successfully held by the end of July 2022 and crossed USD 18.77 billion.
- India's 5G subscriptions will have 350 million by 2026, accounting for 27% of all mobile subscriptions. By 2025, India will need around 22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing. Over the next five years, a rise in mobile phone penetration and a decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses. Such a factor states the demand for data center servers in the country.
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Rack Server to Hold Significant Share
- Rack servers are compact and efficient devices that can handle a variety of computing tasks and are commonly used in data center environments where space is at a premium. The advantages of a server rack include increased scalability, maximized airflow when coupled with a cooling system, and ease of regular computer maintenance and diagnostics. In India, various end users prefer rack servers due to the above advantage, and with increasing digitalization, the market is expected to increase.
- The Indian banking industry has recently introduced new banking formats, such as payments and small financial institutions. In recent years, India has concentrated on expanding its banking sector reach through various initiatives such as the Pradhan Mantri Jan Dhan Yojana and Post Payment Banks. These schemes, combined with key banking sector reforms such as digital payments, neo-banking, the rise of Indian NBFCs, and fintech, have considerably improved India's financial inclusion and helped fuel the country's credit cycle.
- The majority of Indian people are switching to Internet payment methods. To encourage digitization in the nation, the government is also working together. The Reserve Bank of India (RBI) announced the start of its first worldwide hackathon, HARBINGER 2021 - Innovation for Transformation, with the 'Smarter Digital Payments' theme in November 2021.
- Since the pandemic, cloud computing has evolved as a mission-critical technology for businesses, governments, and consumers. It is not only the foundational technology for digital transformation but also allows for innovation and collaboration among ecosystem stakeholders.
- Cloud computing will account for 8% of India's GDP by 2026. Indian enterprises adopting public cloud have spent an average of INR 3.7 billion (USD 0.045 billion) on it in the past 12 months from July 2023. Overall, the market is expected to hold significant demand for the rack server due to its potential advantage.
