Rugged Servers Market Size & Share, COVID-19 Impact Analysis, By Cooling Type (Passive and Fan-based), By Industry (IT, Telecom, Aviation, Defense & Military, Oil & Gas, Manufacturing, Marine, Energy & Power, and Others), and Regional Forecast, 2023-2030

The global rugged servers market size was valued at USD 587.9 million in 2022 and is projected to grow from USD 614.3 million in 2023 to USD 893.5 million by 2030, exhibiting a CAGR of 5.5% during the forecast period.

Rugged servers are a special division of servers that are built to withstand harsh environmental conditions such as excess vibrations, humidity, dust, and heat, among others. Rugged capabilities are verified by neutral testing procedures namely Ingress Protection (IP), ATEX and IECEx, and military standards. The defense and military industry holds the majority of market share, due to the high deployability and functionality of these servers.

Government and Administration bodies across numerous nations are imposing stringent regulations concerning product safety and product quality. Data centers function as a critical infrastructure in every industry, hence it would positively impact the growth of the market. For instance, in June 2022, Cubic Corporation received DoDIN APL certification for their rugged servers namely M3X and M3-SE. This enabled access to IP switching, interoperability testing, and integration to network switches for the department of defense.

COVID-19 IMPACT

Limited Technological Investments and Advancements During Pandemic to Hamper the Market Growth

Only a small number of essential industrial companies were permitted to function during the pandemic, resulting in significant reduction in demand for various raw industrial materials and essential equipment. The above factors appear to have slightly impacted this market, however, the demand for these servers is witnessing healthy growth during the period of 2019 to 2023.

The manufacturers are definitely going to increase their production capacities, but there are numerous other challenges as well, nevertheless many large companies will start manufacturing in-house to secure future semiconductor supplies.

• In August 2020, Trenton Systems, Inc. is a manufacturer of blade servers, workstations, rugged servers, mini PCs, storage systems, PCIe backplanes, and processor boards, proficient at designing and manufacturing rugged workstations for Automated Testing Equipment (ATE) for key defense agencies and contractors in the U.S. The company has its own DO-160 and MIL-STD-810 design, manufacturing, assembly, integration, and support systems and testing capabilities.

Hence, the COVID-19 crisis negatively impacted the global market growth for a few quarters in 2020, but revived at a healthy pace in 2021 and is estimated to showcase speedy growth through 2022 and in the coming years.

LATEST TRENDS

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Rising Investments in Data Center Projects by Emerging Industries to Pose Opportunities for the Market

Numerous emerging industries such as manufacturing, marine, oil and gas, and energy & power are adopting digitization, while relying on data driven digital services. Computing systems are becoming absolutely crucial for partial or complete business operations, depending on the industrial enterprises.

Rugged servers are also implemented in data centers as rack mount servers, which further improves capabilities by integrating Graphical Processing Units (GPU) and additional operating compliances, with advanced FIPS security to function in harsh environments. These factors enable scalability, virtualization, and implementation of multiple Rugged Enterprise Server (RES) form-factors and Ethernet switches.

Many industrial sectors, such as marine, are adopting cloud computing services which utilizes data centers to function over the internet. This has resulted due to increased investments in regional data centers. For instance, Hyundai E&C invested USD 47.7 Million and developed a marine data center to enable facilities such as data storage, computer technologies, and training centers in South Korea.

• November 2022: Equinix, which is a provider of digital infrastructure, has announced its contribution to enter the Malaysian market, with USD 40.0 Million to establish data centers for International Business Exchange (IBX).

DRIVING FACTORS

Multiple Device Integrations and Stringent Regulations for Device Safety and Serviceability are Boosting Server Demand

Enterprises providing electronics and computing devices are changing and adapting to latest technologies, including IoT and edge computing very quickly due to increasing consumer trends and industry technology. Manufacturers are responding to market changes and implementing advanced technologies into their industries. As a result, product functionality and regulatory compliances are rising significantly.

Device integrations enable providers to implement multi-functionality devices into their business models. This process boosts device capabilities and increases sales growth by transforming stand-alone devices into highly functional multi-purpose devices.

Defense standard equipment contains Commercial of the Shelf products (COTS), which provides assurance and compliance to operate under extreme conditions. These servers provide military-grade standards to prove operating temperature and humidity among other factors, which facilitates consumer demands and enhances growth and expansion.

• March 2021: Lenovo launched a new lineup of embedded computers that provide rugged functionalities, along with latest powerful processing equipment. Lenovo ThinkEdge S50 enabled deployability in the healthcare industry due to its capabilities to integrate multiple medical devices.

Thus, such factors positively impact the industries and propel growth in this market.

RESTRAINING FACTORS

Higher Initial Setup Costs and Server Maintenance to Limit the Market Growth

Due to inflation, the cost of the server increased in July 2022. Meanwhile, other storage applications such as cloud infrastructure continued to decrease and professional services settled down. Numerous Small & Medium Enterprises (SMEs) administer to cloud service providers for data storage facilities, due to high initial setup costs, and post-sales expenses. For instance, in August 2022, Techtarget revealed the 3.1% of month-over-month increase in server’s prices and host computers. Large scale enterprises generally prefer on-premise and hybrid deployment options for their data storage due to security and privacy reasons, which also increases server maintenance expenses.

Rugged servers being durable and functional in extreme conditions, are often fully sealed which increases the persistence to resolve maintenance issues. This factor causes plenty of enterprises to resist the utilization and implementation of these servers, which impede the growth of the market.

The impact of such factors is limiting the market growth of rugged servers.

SEGMENTATION

By Cooling Type Analysis

Demand for Low-Latency and High Capacity Data Centers to Increase Implementation of Cooling Systems.

The market is segmented by cooling type, which includes passive and fan-based. Fan-based segment control the greater market share, and as per our findings, it is to expand at a healthy CAGR during the forecast period. Due to innovative launch of noise-less fans and instant response toward heat, suppliers are deploying supplemental fan-based rugged servers.

Passive cooling enhances the durability by empowering the servers to be fully enclosed. It also reduces the number of moving parts, which further contributes to deployability in remote areas and harsh environments. Numerous investments have been made to attribute respect to innovations in cooling devices. For Instance,

• In September 2022, the U.S. Department of Energy (DOE) announced funding of up to USD 42 million to overcome technological barriers associated with developing high-performance, energy-efficient cooling solutions for data centers. Data centers are used to house storage systems, computing infrastructure, and computers and account for approximately 2.0% of all U.S. electricity production. On the other hand, data center cooling can account for up to 40% of a data center's total energy consumption. 

By Industry Analysis 

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Partnership and Collaborations in the Defense & Military Industry to Propel the Market Growth

Based on industry, the market is segmented into IT, telecom, aviation, defense & military, oil & gas, manufacturing, marine, energy & power, and others.

Rugged servers are majorly deployed in the defense & military industry to sustain harsh weather, extreme conditions, and vibrations. These servers offer functionalities and capabilities to resist shocks, vibrations, extreme temperatures, and avoid failures and functional loss. These features enable sales growth and deployment in the increasing military forces of rising provinces. Integrating reliability and performance improves collaboration and data sharing between numerous troupes and teams. Moreover, these servers also provide potential for additional non-consumer software and add-on equipment.

Research by the Stockholm International Peace Research Institute (sipri.org) shows that there was 0.7% increase in worldwide military expenditure from 2020 to 2021, which amounted to USD 2,113 billion. The major contributors to the spending were the U.S., China, India, the U.K., and Russia, which collectively accounted for 62% of the total expenditure.

Rugged server’s capabilities are also applicable in other defense forces such as marine, aerospace, and naval, where certifications such as water resistant, dust resistant, and temperature repellant are implemented to their full potential. Additionally, many other provinces from Asia and Europe regions are following up on the trend of military expansion, which further increases the scope of the market. For instance,

April 2022: Japanese government invested USD 7 billion in military expenditure which increased the annual expenditure by 7.3% in 2021. These investments resulted in increased adoption of new technologies and implementation of rugged servers.

REGIONAL INSIGHTS

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In our research, we have evaluated the geological aspect into five regions, including North America, South America, Europe, the Middle East & Africa, and Asia Pacific. These regions are further categorized into several dominating countries.

North America dominated the global market share in 2022. Increasing usage of cloud-based applications is among the key factors driving the rugged servers market growth across North America. The rapid cloud disruption of data storage faced by the North American cloud service providers, is focused on delivering centralized computation through data centers.

Moreover, the growth in the North America market is attributed to high investments by the U.S. Department of Defense for IT modernization programs. In January 2020, the U.S. Department of Defense awarded Science Applications International Corp. (SAIC) a USD 727 million contract to transform 800 U.S. Army and U.S. Air Force applications into the cloud. The server market saw a long period of sluggish growth worldwide following the global financial crisis in 2008. However, in recent quarters, a strong trend toward recovery has begun. Thus, the demand for these servers in North America is also estimated to register a healthy growth of 4.6% from 2022-29.

Defense spending has been on the rise in recent years and the war in Ukraine has been a clear catalyst for renewed defense spending. As a result, Germany, Romania, Belgium, Italy, Norway, Sweden, and Poland have pledged to increase defense spending since Russia invaded Ukraine. This is expected to further increase demand for IT infrastructure spending in the European defense industry. Since NATO's defense ministers agreed to spend an annual quota of 2.0% of GDP on the military budget, several European governments, most notably Germany, have significantly increased defense spending as a result of the first military invasion of the continent since World War. In addition, the European rugged server manufacturers are expanding their customer base by forging profitable partnerships with various military/defense forces. For example, in January 2020, TP Group, a rugged server and display manufacturer for mission-critical applications, announced that it has been awarded a contract by Roda Computer GmbH, its German partner, for the provision of a suite of tailored military ruggedized computer display and server units, worth approximately USD 1.7 million.

Modern processors in smartphones, computers, game consoles, and data center servers are manufactured at 5-10 nanometer nodes. According to BCG and the Semiconductor Industry Association (SIA), around 75% of semiconductor manufacturing capacity and many suppliers of key materials such as photoresists, silicon wafers, and various specialty chemicals are concentrated in East Asia and China and other regions subjected to geopolitical tension and very high seismic activities. In addition, Asia Pacific could make a significant contribution to the global ruggedized server market due to the increasing number of industrial and residential communication network services. Additionally, with the development of the aerospace and military industries across the region, the demand for ruggedized servers is expected to increase significantly.

For instance, the Chinese government has announced that defense spending in 2022 will increase by 7.1% year-on-year, totaling USD 230 billion in 2022. The proposed defense budget marks his seventh straight year of single-digit growth since 2016, returning to more than 7% increase, the highest rate of defense budget growth since the start of the COVID-19 pandemic.

South America and the Middle East and Africa are to display a healthy CAGR during the forecast period. The region experiences high humidity conditions due to the tropical climate, which enhances the deployment of these servers due to its capabilities to operate under high temperatures and humidity. This provides an opportunity for the vendors to invest and further expand in these geographical regions.

KEY INDUSTRY PLAYERS

Launch of Innovative Offerings, Multiple Device Integrations, and Fusions to Enhance the Market Growth

Key players have implemented multiple device integrations with their stand-alone rugged servers, which enhanced the product sales of numerous multi-functional computing devices and improved consumer experience. Integrations through collaborations with software providers were also observed, which further increased the rugged servers market share by introducing new use cases.

Some players have further innovated their pre-existing products such as servers, tablets, and rugged displays among others to work in synchronization with embedded computers to perform as a workstation or data center. For instance, on May 2022, MPL AG launched a CEC generation solution, which provided ultra-compact design, and compliance certification for wide operating temperatures. Additionally, the company also offered passive cooling solutions along with server capabilities to a small form factor workstation to meet client requirements.

List of Key Companies Profiled:

• Dell Technologies Inc. (U.S.)


• Mercury Systems Inc. (U.S.)


• Elma Electronic (Switzerland)


• Crystal Group Inc. (U.S.)


• Core Systems (U.S.)


• Systel Inc. (U.S.)


• Trenton Systems Inc. (U.S.)


• Pentagon Rugged Systems Pvt. Ltd. (India)


• NCS Technologies Inc. (U.S.)


• ZMicro (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2022 – Dell expanded its product portfolio by implementing frontier software platform onto its rugged and edge computing capable products. This enables access to multi-cloud technologies and IoT infrastructure. The company also expanded its partner ecosystem by deploying services and products to the manufacturing edge.


•  August 2022 – Mercury systems launched a rugged data storage system which enabled faster transfer and access of big data using edge computing. These devices were designed for rough terrains, also reducing sustainment costs.


• April 2022 – Mercury Systems received a USD 16.8 million contract award from a prime defense contractor. The award was stated to the company to provide rugged BuiltSECURE servers for harsh terrain and ground deployment.


• April 2022 – Crystal Group Inc. collaborated with VMware to provide new products of virtualization-enabled servers. This enabled remote management and security features for improved reliability.


• March 2021: Ametek announced the acquisition of Abaco, which was a provider of rugged computing solutions and products, designed for military & defense and industrial consumer industries. This acquisition was priced at USD 1.35 billion, which resulted in business expansion in various geographical markets.


• February 2021 – Motorola partnered with Bullitt Group, a provider of rugged smartphones and tablets. The partnership resulted in product innovation and expansion in business growth. Bullitt has also partnered with CAT to integrate data into rugged smartphones.

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Our analysis on this market provides leading business insights on global regions to improve business decisions and judgment, considering the market. Furthermore, the report provides key insights into the recent developments of the market trends and industry as well as a thorough review of emerging technologies which are being adopted worldwide. It also emphasizes the major growth-stimulating factors and elements, which allows the reader to obtain an in-depth perception of the market.

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