By BARON FUNG, Dell'Oro Group -- As we enter a new decade, I would like to share my view on the key trends that will shape the server market at both the cloud and edge.
While various use cases of enterprises running workloads in data centers on-premises will persist, investments will continue to pour into the major public cloud data service providers (SPs). Workloads will continue to consolidate to the cloud, as cloud data centers scale, gain efficiencies, and deliver transformative services.
In the longer-term, we forecast that compute nodes could shift from centralized cloud data centers to the distributed edge as new use cases arise that demand lower latency.
The following are five technology and market trends in the areas of compute, storage, and network to watch in 2020:
1. Evolution of Server Architecture
Servers continue to densify and increase in complexity and price point. Higher-end processors, novel cooling techniques, accelerated chips, higher-speed interfaces, deeper memory, flash storage implementation, and software-defined architectures are expected to increase the price point of servers. Data centers continue to strive to run more workloads with fewer servers in order to minimize power consumption and footprint. Storage will continue to shift toward server-based software-defined architecture, thus dampening demand for specialized external storage systems.
2. Software-defined Data Centers
Data centers will continue to become increasingly virtualized. Software-defined architectures, such as hyperconverged and composable infrastructure, will be employed to drive higher degrees of virtualization. Disaggregation of various compute nodes, such as GPU, storage, and compute, will continue to rise, enabling enhanced resource pooling and, hence, driving higher utilization. IT vendors will continue to introduce hybrid/multi-cloud solutions and increase their consumption-based offerings, emulating a cloud-like experience in order to remain relevant.
3. Cloud Consolidation
The major public cloud SPs – AWS, Microsoft Azure, Google Cloud, and Alibaba Cloud (in Asia Pacific) – will continue to gain share as the majority of small-medium enterprises and certain large enterprises embrace the cloud. Smaller cloud providers and other enterprises will inevitably migrate their IT infrastructure to the public cloud due to its increased flexibility and feature set, improving security, and strong value proposition. The major public cloud SPs continue to scale and drive towards higher efficiencies. On the longer-term, growth among the large cloud SPs are projected to moderate, due to on-going efficiency improvements from the server rack to data center, and consolidation of the cloud data centers.
4. Emergence of Edge Computing
Centralized cloud data centers will continue to drive the market within the forecast period of 2019 to 2024. At the end of this time frame and beyond, edge computing could be more impactful in driving IT investments because, as new use cases emerge, it has the potential to shift the balance of power from cloud SPs to telecom SPs and equipment vendors. We anticipate that cloud SPs will respond by developing edge capabilities internally and externally, through partnerships or acquisitions, in order to extend their own infrastructure to the edge of the network.
5. Advances in Server Network Connectivity
From a server network connectivity standpoint, 25 Gbps is expected to dominate the majority of the market and to replace 10 Gbps for a wide range of applications. The large cloud SPs will strive to increase throughput, driving the SerDes technology roadmap, and enabling Ethernet connectivity to 100 Gbps and 200 Gbps. New network architectures, such as Smart NICs and multi-host NICs have the opportunity to drive higher efficiencies and streamline the network for scale-out architectures, provided that the price and power premiums over standard solutions are justified.
This is an exciting time, as increasing demand in cloud computing is driving the latest advances in digital interfaces, AI chip development, and software-defined data centers. Some vendors came out ahead and some were left behind with the transition from the enterprise to the cloud. We will watch closely to see how vendors and service providers will capitalize on the transition to the edge.
BARON FUNG joined Dell’Oro Group in 2017, and is currently responsible for the analyst firm's Cloud Data Center Capex, Controller and Adapter, Server and Storage Systems, as well as its Multi-Access Edge Computing advanced research reports. Since joining the firm, Mr. Fung has significantly expanded Dell'Oro's analysis of data center cloud providers, delving deep into capex and its allocation as well as the vendors supplying the cloud.
