Data Center Rack Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

The global data center rack market was valued at USD 1.58 billion in 2020, and it is expected to reach USD 2.11 billion by 2026 at a CAGR of 5.56% during 2021 - 2026. Whether private or public, the data centers are critical to the enterprises that are hosting mission-critical applications. These data centers primarily help organizations streamline information while enabling easy access to users and customers from anywhere across the world. Data centers have witnessed growth majorly owing to the increasing dependence and spending on cloud technologies.

• Data centers have become a key component in IT infrastructure for many organizations. With large amounts of data being generated daily, companies rely on data centers for efficient handling of data and storage. Therefore, the growing deployment of data centers around the world is the major driving factor influencing the consumption of data center racks. The increasing demand for technology services and increasing investments from major companies are also changing the market's growth.
• These data center racks are deployed, primarily for infrastructure management in the data centers. These racks are used to host servers, switches, cables, and other equipment in the data center. With changing technologies and adoption of high-density servers, rack infrastructure has become a crucial aspect in the data centers, with the need to effectively host servers, manage cables, and facilitate airflow for ensuring optimum performance of data centers.
• Initially, the focus on rack infrastructure in data centers was minimum, with size and cost being the only considerations during deployment. However, the adoption of high-density applications, and the importance of power, cooling, and data center efficiency growing, the need for efficient rack enclosures are growing.
• Additionally, the importance of cooling and power in the data center is also an influential factor in the growth of the market. It is estimated that 39% of the power consumed by the data center is spent on cooling. Thus, companies are demanding efficient cooling systems to reduce the consumption of energy and improve overall efficiency.
• The growing cloud demand and data traffic moving from and within the data centers is expected to bolster the global demand during the forecast period. As per Cisco, the cloud data center IP traffic is expected to reach 19,509 exabytes annually by 2021 compared to 1,046 exabytes per year of traditional data center traffic.
• The recent outbreak of the coronavirus pandemic has posed additional stress on many economies across various sectors. It has also shifted focus towards a digital economy. Alibaba Cloud, China's top cloud computing provider, is investing billions in building next-generation data centers to support digital transformation needs in a post-pandemic world. In April 2020, Alibaba Cloud announced that over the next three years, it would invest CNY 200 billion in core technologies and the construction of future-oriented data centers.

Scope of the Report

A data center rack is a type of physical steel and electronic framework designed to house servers, networking devices, cables, and other data center computing equipment. Data center racks are deployed, primarily for infrastructure management in data centers. These are being used in the manufacturing, retail, BFSI, IT, and telecom industry.

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Key Market Trends

BFSI Sector Expected to Hold a Significant Share

• Cloud and data centers have become the backbone of the BFSI sector, especially during the digitization movement. The increasing competition and the demand for online services in the banking and financial sectors drive the market for data centers, and by extension, data center racks.
• Data centers have become very crucial for financial services. The racks used in the banking sector are required to have additional protection against theft, damage, and other risks. Racks enable the banking service providers to have a platform that hosts the systems and protects them from unforeseen physical risks. These racks are modular, owing to which the banking service providers can upgrade when required.
• To cater to this increasing demand from this sector, the rack providers are developing separate products for this segment. The most recent was by NetRack, which launched Data Center racks in 2019 to cater to banking and insurance sectors.
• The strong presence of BFSI in the developed regions, like North America and Europe, has led to increased penetration of digital services. This is primarily owing to the higher degree of awareness related to digitization in these regions. Along with this, Asia-Pacific is also growing at a substantial rate, due to huge consumer base for these services, and countries like China and India, which are witnessing a strong shift toward the cloud services in the banking sector.
• The growing scope of online payment further increases the need for data centers in the BFSI sector. Banks and financial institutions securely store customer information in both on-premise and cloud data centers, as well as on the trading floors and in branch operations.
• Owing to the global coronavirus disruption, the adoption of digital banking solutions is expected to further adopt technologies like containerization, cloud computing, microservices, APIs, and blockchain. Hence, the financial and banking industry is expected to provide several opportunities for data centers' growth.

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