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Data Center Spending To Decline In 2019: 5 Reasons Behind The Fall

Leading Gartner researcher John-David Lovelock talks about the major reasons and trends behind the projected 2.8 percent decline in data center spending in 2019.

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Lower Server Prices

A major factor in the data center spending decline is lower average selling prices for servers in 2019. The lower expected average server price is being driven by adjustments in the pattern of expected component costs, said Lovelock. Cloud-based alternatives to data center equipment is driving growth in enterprise software spending, which is expected to increase 7.1 percent in 2019 year over year to $427 billion. However, data center providers are shifting their sales motion to provider new data center consumption-based offerings such as Hewlett Packard Enterprises GreenLake and Lenovo TruScale Infrastructure Services.

“Consumption-based [offerings] competes against one big advantage that the cloud has, which is paying for consumption rather than paying upfront,” said Lovelock. “This is a financing play to smooth out the cost of a server, to take one of the advantages that the cloud has and level that playing field. We saw the same thing happen when cloud came into software in that license vendors went to a subscription-based instead of license upfront and maintenance going forward.”

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