Enterprise infrastructure, networking market expected to decline due to COVID-19

The ongoing coronavirus pandemic is expected to prolong the decline of the enterprise infrastructure and networking market in Australia and New Zealand due to the COVID-19 pandemic.

Analyst firm IDC originally predicted that the market for servers, external storage and networking equipment in ANZ would bounce back this year from a turbulent 2019, but the company has since revised the outlook to see further declines instead.

The market last year was affected by an economic slowdown in China and other global events like Brexit affecting both Australia and New Zealand’s gross domestic products (GDPs). Local pressures also included tighter credit conditions in Australia as well as federal and state elections during the year.

The ANZ enterprise infrastructure market was at US$ 2.63 billion in 2019, a 9 percent reduction from 2018, but IDC now expects it to decline another three percent to around US$ 2.5 billion as demand dries up due to cautiousness in spending and with the disruption of supply chains.

However with more employees starting to work from home due to COVID-19, demand for cloud-based resources for business continuity should help fuel the recovery into 2021.

IDC ANZ senior research manager Cynthia Ho said, “We expect higher adoption of cloud and next-generation architectures such as hyperconverged systems and software-defined, as the needs for Virtual Desktop Infrastructure (VDI) continue to rise due to work from home policy.”

While the server and storage market will be hit the most, networking equipment won’t decline as much in comparison.

IDC ANZ senior market analyst Ahmar Karimullah said the reduced impact is expected because engineers “always keep future requirements in mind at network designing stage”.

“The final network deployed has a higher capacity than what the requirements dictated at the time. This forward-thinking ensures that the network keeps on fulfilling its requirements even if it’s not upgraded for some time,” he added.

―CRN