Hyper Converged Infrastructure Market Size, Share, Growth & COVID-19 Impact Analysis, By Component (Solutions, Services), By Application (Remote Office/Branch Office, Virtual Desktop Infrastructure, Data Center Consolidation, Data Protection & Disaster Recovery, and Others), By End-user (Banking, Financial Services, and Insurance (BFSI), IT and Telecom, Manufacturing, Government, Healthcare, and Others), and Regional Forecast, 2021-2028

The Hyper Converged Infrastructure market was USD 5.88 billion in 2020 and is projected to grow from USD 6.79 billion in 2021 to USD 32.19 billion by 2028, at a CAGR of 24.9%. The global market exhibited a lower growth of 14.9% in 2020 as compared to the average year-on-year growth during 2017-2019. The global impact of COVID-19 has been unprecedented and staggering, with HCI witnessing a negative impact on demand across all regions amid the pandemic. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

The scope of the study includes key players such as Dell Technologies, VMware, Inc., Nutanix Inc., Cisco Systems Inc., and Hewlett Packard Enterprise Company. These companies are offering components such as solutions and services. For instance, Nutanix provides hyper- HCI software solutions. Similarly, Dell Technologies offers Dell EMC VxRail, a Hyperconverged Infrastructure system. Dell VxRail delivers high performance in several applications, including graphics, storage, and cost requirements. Further, Hewlett Packard Enterprise Company offers HPE SimpliVity 325 Gen 10 HCI solution with next-generation AMD EPYCTM processor. Cisco's HyperFlex HCI systems offer high efficiency and agility for the data centers by integrating its core infrastructure.

Rising demand for modernizing the data centers with the help of HCI systems to accelerate the business growth aids the Hyper Converged Infrastructure market growth. It is a software-defined infrastructure model used for data center consolidations to provide cost savings and enhance operational efficiencies. Key players in the market are focused on developing advanced HCI solutions to expand their businesses. For instance,

• In February 2021: Microsoft Corporation launched the availability of advanced Hyperconverged Infrastructure Azure Stack solution that combines scalability and price-performance advantage. It has native Azure hybrid capabilities and can be used for data center modernizations and consolidations.

Increasing usage for desktop virtualization, owing to rising work from home situations during the COVID-19 pandemic could aid the market growth. Also, the rising demand for data protection and disaster recovery in the IT and telecommunication sectors has propelled the market growth.

COVID-19 Impact

Manufacturing and Supply Chain Disruptions amid COVID-19 Pandemic Declined Demand

The COVID-19 pandemic has slightly declined the demand owing to the halt in manufacturing and supply chain activities related to infrastructure development. Also, the supply chain related to hardware HCI solutions has been disrupted owing to travel restrictions and the closure of import-export activities. However, various end-use companies have adopted these HCI software solutions to reach their workforce in remote locations. According to the Environmental, Social and Governance (ESG) Research Global Survey in 2020, approximately 87% of IT managers have adopted HCI solution to make it more agile.

Also, post COVID-19 pandemic, several leading players have launched Hyper Converged solutions for virtual desktop support and server virtualizations. For instance,

• In February 2021: Microsoft Corporation launched Azure Stack HCI solution focusing on hybrid cloud in India. The launch of this advanced solution allows customers to adopt a multi-cloud, multi-edge hybrid approach seamlessly.

LATEST TRENDS

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Growing Number of Digital Businesses Transformation Initiatives Aids Market Growth

HCI reduces the requirement for substantial IT server and storage management resources. HCI solution makes it easier to migrate the data and deploy hybrid cloud. Increasing adoption of Hyper Converged Infrastructure solutions for digital transformation in the end-user industries, such as retail & e-commerce, healthcare, IT & telecom, and others, has propelled the market growth. For instance,

• In September 2021: FLOWERS.COM, Inc., an e-commerce retailer company, adopted digital technologies, such as artificial intelligence, augmented reality, and Hyper Converged Infrastructure solutions, to help transform businesses.

Further, several leading players are launching advanced technology platforms and hardware solutions for enhancing their storage capabilities. For instance,

• In November 2021: VMware launched software-defined HCI Mesh solutions. The advanced solution offers deployment flexibility to compute and storage disaggregation and expands native file services capabilities.

DRIVING FACTORS

Increasing Demand for Data Security and Data Recovery using Advanced HCI Services Drives Market Growth

Increasing adoption of HCI services, such as disaster recovery and data security, is driving the growth of the market. Also, the growing adoption of digital technology platforms, such as social media and knowledge platforms, has surged the demand for HCI. According to IBM Corporation Report in 2020, the total average cost of data security breach reported USD 3.86 million per breach. The price includes both personal and corporate penalties for data breaches. Hyper Converged solutions are used to reduce the risk of data security breaches with the help of specific components applications. It also includes a high-security AMD processor suite with security features that minimizes security risks.

Rising Demand for Data Centre Consolidation with Surge in Digital Transformations Supports Growth

Rising digital transformation in data centers using HCI solutions drives the market growth. The solutions are used for data center modernization and consolidation using the compute storage network. It creates a software-defined virtualized environment that is easier to scale up and out the data center capabilities. The solutions help to improve the performance and reduce operational costs. Rising investment for the data center infrastructure development is expected to witness potential opportunity for market growth. For instance,

• In September 2021: Techno Electric and Engineering Company (TEECL) Power Infrastructure Company planned an investment of USD 1 billion to establish advanced data centers across major cities in India.

RESTRAINING FACTORS

Compatibility Issue and High Power Requirements Hinder Market Growth

Hyper Converged architectures include computing, networking, and storage systems in a single environment. It is subject to considerable workloads in a limited space, requiring more power than traditional data centers. Thus, to tackle this, some workloads need to migrate to cloud storage, requiring additional hardware and power. The requirement for high power is hindering the market growth. Also, Hyper Converged solutions need to ensure enough power and cooling to meet the workload demand. It can come with additional costs.

Further, HCI solutions are subjected to compatibility issues. Different manufacturers have different software and hardware sets, so it is difficult for consumers to adopt these HCI solutions. This compatibility issue, additional cost, and high power requirement for the equipment hinder the market growth.

SEGMENTATION

By Component Analysis

Advancement of the Compact Hardware Solutions to Strengthen the Market Growth

Based on components, the market is divided into solutions and services. Among these, the solutions segment is projected to dominate the market with the largest share. This is primarily attributed to the rising development of compact hardware systems by the leading players in the market. For instance,

• In May 2021: Dell Technologies launched managed storage, server, and Hyper Converged Infrastructure hardware solutions. It can be deployed for data center consolidation at edge locations. It is used for cloud services storage and streamlined management. 

Also, the services segment is expected to grow with the highest CAGR during the forecast period. This is primarily attributed to rising businesses’ digital transformation around the globe. According to the McKinsey & Company Report in 2020, digital technology adoption rate increased from 36% to 58% globally during the COVID-19 pandemic. This would boost the adoption of services during the forecast period.

By Application Analysis

Virtual Desktop Infrastructure Expected to Have Significant Share Owing to ‘Work from Home’ and ‘BYOD’ Trends

Based on application, the market is divided into a remote office/branch office, virtual desktop infrastructure, data center consolidation, data protection and disaster recovery, and others (server virtualizations).

Among these, the virtual desktop infrastructure segment is projected to have a significant Hyper Converged Infrastructure market share during the forecast period. This is primarily attributed to the emerging trends, such as Bring Your Device (BYOD) and surge in work from home from remote locations. According to Cisco Systems Survey, 59% of the employees in the IT sector across the U.S. have adopted BYOD during the COVID-19 pandemic. Virtual desktop infrastructure is the centralized system used to manage remote employees’ devices.

Remote office/branch office, virtual desktop infrastructure, data center consolidation, data protection, disaster recovery, and others are also growing steadily. Data protection and disaster recovery applications segment are increasing with the highest CAGR during the forecast period, owing to the rising number of data breaching cases. For instance, according to the U.S. Department of Health and Human Services, an estimated 98.2 million individuals in the U.S. were impacted by data breaches in the first quarter of 2021. Such an increase in data breaches has strengthened the demand for data protection and disaster recovery application.

By End-user Analysis

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Increasing Demand for Data Protection in the Banking Industry to Boost Market Growth

Based on end-user, the market is divided into banking, financial services and insurance (BFSI), IT and telecom, manufacturing, government, healthcare, and others (education). The banking, financial services and insurance (BFSI) sector is expected to have the largest share during the forecast period. This is primarily attributed to the rising demand for data storage and protection in the financial and insurance sector.

The IT and telecom sector is growing with the highest CAGR during the forecast period. This is primarily attributed to the rising digital transformation of businesses and surging IT investments by the leading players. For instance, in 2020, the International Finance Corporation invested around USD 8 billion in the IT and telecommunications sector. Such an increase in the funding for IT infrastructure development drives the market growth.

REGIONAL INSIGHTS

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The market has been analyzed across five major regions, North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

North America is expected to dominate the global market. This is primarily attributed to the presence of leading players such as Dell Technologies, Cisco Systems Inc., Hewlett Packard Enterprise Company, IBM Corporation, Microsoft Corporation, and others. Also, increasing investment for the data center infrastructure establishment and modernization in this region aid the market growth. Such rise in data center infrastructure across North America has propelled the market growth.

Asia Pacific is predicted to grow with the highest CAGR during the forecast period. This is primarily attributed to rising investment by the major players across the region. For instance,

• In April 2021, Microsoft Corporation planned to invest around USD 1 billion in Malaysia by partnering with local companies and government agencies to set up a new data center. Such investment for the data center establishment is expected to create ample opportunities for market growth.

Europe is growing with a stable CAGR during the forecast period. Rising digital transformation initiatives by the leading players with increasing investments for the data center establishment drive the market growth. For instance,

• In November 2021, the European Commission launched the Digital Europe Programme with funding of USD 2.24 billion for digital transformations of businesses. The Digital Europe Programme aimed to bolster Europe's digital technology adoption for public administrations and small & medium enterprises.


• In September 2021, Google invested around USD 1.13 billion in Germany to expand cloud data centers using renewable energy sources.

South America is expected to grow significantly during the forecast period owing to increasing investment by the leading players and the rising number of digital start-ups in Brazil. For instance, in the first half quarter of 2021, Brazil received USD 5.2 billion in digital start-ups. In 2020, Brazil's total digital start-up investment reached USD 3.5 billion. Such an increase in digital technology start-up investment in Brazil has strengthened the market growth.

During the forecast period, the Middle East & African countries, such as Saudi Arabia, South Africa, and other GCC countries, are expected to grow considerably. This is primarily owing to the surge in development of advanced HCI-based data centers and rising government initiatives for digital transformations. For instance,

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• In May 2021: Amazon.com Inc.’s subsidiary Amazon Web Services (AWS) planned to open three new data center infrastructures in the United Arab Emirates (UAE). That is expected to complete by 2022.

KEY INDUSTRY PLAYERS:

Product Launch & Expansion Strategy to Lead to High Competition among Key Market Players

Key players in the market, including Dell Technologies, VMware Inc., Nutanix Inc., Cisco Systems Inc., Hewlett Packard Enterprise Company, NetApp Inc., and others are focused on offering advanced solutions. These players are developing and expanding their product portfolio to cater to the increasing digital transformation needs. For instance,

• September 2020 – Nutanix Inc. developed Hyper-Converged Infrastructure software with hybrid cloud capabilities. This software facilitates 50% faster performance and virtual networking. It includes two advanced cloud-based software offerings, security monitoring, and provides security compliance.

List of the Key Companies Profiled:

• Dell Technologies (Texas, U.S.)


• VMware Inc. (California, U.S.)


• Nutanix Inc. (California, U.S.)


• Cisco Systems Inc. (California, U.S.)


• Hewlett Packard Enterprise Company (Texas, U.S.)


• StorMagic (Bristol, U.K.)


• Huawei Technologies Co., Ltd (Shenzhen, China)


• IBM Corporation (New York, U.S.)


• Microsoft Corporation (Washington, U.S.)


• Scale Computing (Indiana, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• July 2021: Microsoft Corporation planned to invest around USD 2 billion to open a data center in Telangana State in India. Telangana government has supported setting up a data center in this region.


• September 2020: Lenovo Corporation’s Data Center Group expanded its Hyper Converged Infrastructure capability in order to meet the growing demand for cloud services across remote work environments. Hyper-Converged Infrastructure solution plays a vital role in the growing hybrid cloud and data center infrastructure requirements. The solutions support virtual desktop infrastructure that helps to connect remote working people.

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