There’s been an ongoing debate about the relative strategic importance of public clouds versus on-premises IT environments for several years. The general consensus today is that the deployment of on-premises servers will continue to decline as more workloads shift to the cloud. Given the dependence many managed service providers have on revenue generated by remote server management, the rate at which that transition is occurring is critical to determining where to allocate resources.
A global server shipment report published by IDC provides some crucial insights. Overall, IDC is reporting worldwide server shipments declined three percent year over year in the fourth quarter of 2020 to nearly 3.3 million units. As it turns out, much of the demand for servers came out of China, with a small boost in South America. Server revenues declined 6.2 percent in North America, while Europe, Middle East and Africa declined a more modest one percent, the report finds.
However, it’s worth noting that much of the decline in revenue is attributed to higher end servers that cost more than an x86 servers. Overall, IDC notes worldwide server revenues grew 1.5 percent year over year to $25.8 billion in the fourth quarter. That means a lot x86 servers were sold to make up for higher end servers that many organizations have been steadily abandoning now for the better part of a decade.
It’s not clear whether organizations will be refreshing existing x86 servers any time soon given the overall fragility of the economy. With investments in everything from virtual desktops to large scale digital business transformation initiatives, there are still plenty of organizations upgrading on-premises servers albeit at a declining rate. In fact, the bulk of the data that any organization has, still resides in on-premises systems.
Cloud opportunities emerge
Of course, the rate at which new application workloads are being deployed favors the cloud. At some point this decade, the amount of data residing in the cloud should surpass the amount of data that resides in public clouds. The only caveat may be how much data winds up being processed and stored on edge computing platforms that are expected to drive $800 billion in investments through 2028.
Put it altogether and it becomes apparent the real debate from an MSP perspective isn’t so much about whether one class of cloud platforms will succeed at the expense of all others. Rather, IT environments are becoming more distributed. The more distributed IT environments become, the bigger the opportunity for MSPs naturally becomes. Most internal IT teams were struggling to mange a few local data centers, prior to the rise of the cloud, which added complexities. And now that workloads are running on multiple clouds, the chances an internal IT team will be able to cope declines even further. Add in edge computing platforms distributed around the world and it’s very few IT organizations that can manage IT at that level of scale on their own.
Arguably, the worse thing that can happen for MSPs is for the status quo to be maintained. The more change there is, the greater demand there will be for their expertise. The real challenge going forward is not which platform to bet on. Rather, the savvy MSP is going to bet on them all to win. After all, the more IT being consumed the greater the chance there is an organization will need their services.
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