By the Blouin News Technology staff

As cloud computing climbs, data centers decline

by in Enterprise Tech.

Outside air inlets are seen during a tour of the new Facebook Data Center on April 19, 2012 in Forest City, North Carolina.

Outside air inlets are seen during a tour of the new Facebook Data Center on April 19, 2012 in Forest City, North Carolina. Getty Images/Rainier Ehrhardt

The global growth of cloud computing is shaking up the hardware market in tangible ways as more data can be stored and processed on fewer machines. When a business moves its work to the cloud, it consolidates its information on servers housed by another entity with cloud services (like Amazon) or it builds its own cloud, usually with the help of a third party. Regardless of which avenue the enterprise chooses – public or private cloud – virtual storage means fewer racks on fewer servers are needed to perform the same functions. This shift in information technology will take years to have an impact on the computer hardware market, but it will have one nonetheless.

The effects of the shift are already taking place. Technology research firm Gartner recently issued analysis of cloud service trends and server sales across the world for 2012, the results of which could indicate a parallel between the two. Research showed that the public cloud services market grew 42.4% in 2012 while server shipments declined 0.2%. The infrastructure-as-a-service market bolstered the majority of this forge ahead in cloud as enterprises adopt virtualization. And as server virtualization becomes a more popular choice for businesses, the requirement for traditional, on-premise servers naturally declines.

Of course, the global economy has something to do with the dip in server shipments as well; while the figures themselves are not terribly worrisome – at least by Gartner’s account – enterprise budgeting was a big factor in the lagging server market. But other research firms have been coming to similar conclusions, forecasting the slide of the data center market. The International Data Corporation released research in the autumn of 2012 stating that it expects the total number of data centers to fall from 2.94 million to 2.86 million in 2016. While that decline does not seem an egregious one, it’s indicative of the significant effect cloud-based services and virtualized IT processes will continue to have on the computer hardware market as we know it.

The cloud computing scene is just beginning to see serious take-off within enterprises, too, which is part of the reason why this market is so closely watched. Virtual storage services like Amazon’s Redshift are making it more appealing for businesses to house data on third-party servers with inexpensive pricing structures. And as businesses find they require more flexible data warehousing options, these cloud-based storage systems provide scalable services with easily-integrated business intelligence. Cloud computing is also an industry that anyone can get into, apparently, which is part of its appeal: even wireless carriers like AT&T have enterprise cloud storage options.

Realistically, servers and data centers will never be totally virtualized – the physical foundations of any network must remain intact somewhere to back up data exchange – but the consolidation process is what will take a toll on traditional server manufacturers. As the enterprise IT managers get caught up in the shift towards the cloud, they’ll be relying on the hardware of old less and less, which means server vendors should rethink their hardware offerings to stay in the changing IT space.