Dubai: The Middle East and Africa (MEA) enterprise hardware market, comprising servers and external storage, remains in a passive state due to a gradual shift towards fully virtualised data centres and cloud-based infrastructures, industry experts said.

The server market is expected to grow by just 3.07 per cent to total $1.34 billion compared to a five per cent year-on-year increase in value to $1.30 billion. But in unit terms, the market declined by 3.7 per cent in 2013 while the market is expected to grow by eight per cent in unit terms this year.

The MEA enterprise hardware market is expected to grow by 5.43 per cent this year, with much of the growth spurred by infrastructure deals within the oil and gas, telecommunications and BFSI (banking, financial services and insurance) verticals.

“There are a lot of changes occurring in the regional enterprise domain. The growth seen in the x86 server market’s value and the corresponding decline in volume can be attributed to the increased adoption of virtualisation technologies that utilise fewer server units than is the case in traditional data centres,” Zeeshan Gaya, research manager for systems and infrastructure solutions at International Data Corporation (IDC), told Gulf News.

He said the units might be increasing but the revenue will keep decreasing due to tough price competitions and prices are servers are also falling.

The price of servers, which were $2,000 before are now available for $500, he said and added that it is getting subsidised.

“The UAE market is expected to grow by six per cent in units and 11 per cent in value this year. For matured markets with strong small and medium-sized businesses like the UAE, Saudi Arabia, Turkey and South Africa, the scene is quite different. Instead of buying 10 or more servers for $500 each, these markets are expected to buy two high-end servers,” he said.

He added that the key verticals expected to register growth are “telco, Abu Dhabi government sectors, banking and hospitality, especially in the second half of this year.”

UAE’s enterprise hardware market witnessed a strong growth of 11.5 per cent with 2013 revenue representing a healthy mix of spending by the country’s key verticals namely, financial, telco, hospitality and government sectors. In unit terms, the UAE market was flat at one per cent.

According to Swapna Subramani, senior research analyst for storage systems at IDC, the market is witnessing increased uptake of entry-level and midrange storage devices driven by demand for the NAS (network-attached storage) protocol.

Mobility and bring-your-own-device (BYOD) initiatives, video surveillance, and Big Data are the “key driving factors” for this ongoing shift within the regional storage market.

The 2014 MEA storage market value is expected to grow by seven per cent year on year compared to 5.1 year-on-year growth in 2013.

She said lot of held up projects in 2013 are coming through this year, especially in banking, hospitality and telco verticals.