Decline of 4% Y/Y for Storage in Middle East and Africa in 1H17 – IDC

The Middle East and Africa (MEA) enterprise infrastructure hardware market, which includes servers and external storage, suffered a Y/Y decline of 8% in 1H17 to total $1,1 billion.

This is according to the latest Quarterly Server and Disk Storage Systems Tracker from International Data Corporation.

The firm blames the ongoing oil crisis, regional unrest, currency fluctuations, and political instability in certain parts of the region for the decline in enterprise spending.

“We are witnessing a shift in purchasing patterns as organizations are increasingly looking to consolidate their server purchases and optimize their installed base rather than boost their server capacity through new additions,” says Victoria Mendes, senior research analyst for enterprise infrastructure, IDC MEA. “We are also seeing a shift towards higher-end servers when new purchases are made; this trend is particularly evident in the x86 space, where there was a 13% Y/Y decline in the number of units shipped in 1H17, but only a 5% decline in revenue. As such, even vendors that were previously focussed on volume sales are now enagaging in strategic projects throughout the region.”

Despite suffering a Y/Y decline in value of 4% in 1H17, the MEA storage market saw a huge uptake of flash drives during this period. The value of the flash space was up 21% Y/Y in 1H17 versus a decline of 37% over the same period for HDDs.

While there is a general shift underway from traditional HDDs to flash drives (both all-flash and hybrid flash), the huge decline of HDDs was caused by a shortage of memory chips, which is negatively impacting shipments globally.

Looking ahead, IDC expects the enterprise infrastructure hardware market to grow 3% in 2H17 when compared with the corresponding period of 2016. This will result in a closing revenue of $2,4-billion for 2017 as a whole, which represents a decline of just 2% on the previous year.

This is better than IDC’s initial forecast and is being spurred by a number of major projects taking place this year in the oil and gas, education and banking sectors.

“We expect to see some recovery in the second half of the year with new budgets being released across several countries in the region,” says Mendes. “In the longer run, we are definitely going to see a move towards more converged and cloud offerings, which will result in traditional servers and external storage seeing only very low single-digit growth over the next five years.”