Omdia: Servers with AI processing are big sellers

The server market is recovering from last year’s downturn in sales, with a notable distinction: The servers that are selling the most right now are those that are destined to run AI models and come with either a high-end x86 processor or a GPU.

Market research firm Omdia came to this conclusion in its new Cloud and Datacenter Market Snapshot. The global server market grew to $31 billion in the fourth quarter of 2023, up 12.7% year-over-year and up 21.5% compared to the prior quarter.

The growth in revenue comes in spite of a significant drop in volume. Omdia says that preliminary data indicates the number of servers shipped in the quarter was between 2.8 and 2.9 million units, around 500,000 fewer than estimated, and the lowest since 2017. At just under 11 million servers shipped for the year, 2023 volume is 22% lower than 2022 and 5% lower than 2018.

“This reaffirms our thesis that end users are prioritising investment in highly configured server clusters for AI to the detriment of other projects, including delaying the refresh of older server fleets,” the report notes.

Omdia estimates that the average useful life of servers in enterprise data centers or colocation data centers has increased to 7.6 years. Even the hyperscale service providers, known for their aggressive refresh rates, have raised the average useful life of their servers to 6.6 years in 2023.

“Delaying server refresh has freed up capex funds for AI clusters,” Omdia’s analysts wrote. “We anticipate that were they to reach 7 years, a set of formal disclosures will be made. Using equipment which is already amortized positively benefits the balance sheets of companies.”