Hyperscale Computing Market

The Hyperscale Computing Market size is expected to grow from USD 40.9 billion in 2023 to USD 109.2 billion by 2028 at a compound annual growth rate (CAGR) of 21.7% during the forecast period. The future of hyperscale computing appears promising and transformative, as it continues to shape the technological landscape in the coming years. Companies that specialize in hyperscale computing use the latest hardware and software developments to guarantee a high level of dependability and responsiveness to consumer demand. As more idle hyperscale installations are enabled by the IoT and virtual monitoring systems, visibility will improve as CO2 emissions decline. Further, ongoing advancements in hardware, networking, and data management will enhance the efficiency and performance of hyperscale systems. Innovations in processors, storage technologies, and networking infrastructure will lead to even higher processing speeds, lower latencies, and improved energy efficiency. The rise of edge computing, which enables data processing closer to the source of data, will complement hyperscale computing. This integration will be crucial for applications requiring low-latency responses and reducing data transfer to centralized data centers, enhancing overall system performance.

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Hyperscale Computing Market Dynamics

Driver:  High adoption of hyperscale computing in different industries boosts the market growth

The growing demand for hyperscale computing is driven by various industries that require powerful and scalable computing resources. Hyperscale computing is used by technology companies, especially significant cloud service providers and internet service providers, to support their huge infrastructure requirements. To provide their services consistently and at scale, these businesses need a lot of computing power, storage, and network bandwidth. Further, the e-commerce sector significantly relies on hyperscale computing to manage inventories, analyze customer data, process massive volumes of online transactions, and offer individualized shopping experiences. The high availability, performance, and scalability needed by e-commerce systems are ensured by hyperscale infrastructure. Hyperscale computing is necessary for streaming services, gaming platforms, and digital media businesses to process and distribute high-quality content to millions of people worldwide. For the media and entertainment industry, it is essential to have the capacity to manage enormous volumes of data, carry out real-time encoding and decoding, and support high-resolution video streaming. Moreover, hyperscale computing is used by insurance companies, banking institutions, and other financial organizations to handle complicated financial calculations, risk modeling, fraud detection, algorithmic trading, and high-frequency transactions. The BFSI industry requirements include strong security measures, quick processing, and scalable infrastructure, all of which are met by hyperscale solutions and services.

Restraint: Higher capital expenditure costs and lack of data control

To support the needed scale and performance, organizations have to spend money on data centers, servers, networking tools, storage systems, and other hardware elements. For organizations with insufficient funding, these start-up expenses may be a barrier to entry. Organizations frequently need to enter into long-term agreements, including contracts with cloud service providers or colocation facilities, to invest in hyperscale infrastructure. These commitments could include minimum consumption limits or fixed-term contracts, which would increase the upfront expenses while limiting flexibility. Further, organizations may be concerned about the control and security of their data while employing hyperscale computing services. When data is stored on third-party infrastructure, concerns regarding data privacy, regulatory compliance, and the possibility of unauthorized access or data breaches arise. Moreover, organizations may be required by law or regulation to maintain data within particular jurisdictions in some sectors of the economy or certain locations. Utilizing hyperscale computing services may restrict the ability to choose where information is handled and kept, which could provide compliance problems.

Opportunity: Hyperscale data centers will become a new paradigm for delivering IT services

The delivery of IT services has undergone a paradigm shift with the rise of the hyperscale data center, a significant form factor. Hyperscale data centers stand out for their enormous size, high computer density, and effective infrastructure architecture. It serves as the foundation of cloud computing, enabling the provision of a vast array of IT services to businesses and end users. Massive workloads and enormous data volumes can be handled by hyperscale data centers. The capacity to service a huge number of users and applications is provided by the tens of thousands of servers, storage systems, and networking tools that are often housed in them. This scalability enables performance-uncompromising handling of peak demand and dynamic workloads, as well as effective resource allocation. Further, high availability and resilience are prioritized in hyperscale data centers. It is built with redundant network connectivity, power systems, and storage to guarantee minimal downtime and unbroken service delivery. Additionally, it frequently has several geographically dispersed data center locations, providing enhanced resilience and disaster recovery capabilities that will boost the hyperscale computing market.

Challenge: Carbon emissions by hyperscale data centers

Hyperscale data centers consume substantial amounts of energy to power and cool their large-scale infrastructure, resulting in considerable carbon emissions. Addressing this challenge is crucial to minimize the environmental impact and promote sustainability. Hyperscale data centers consume massive amounts of electricity to support their operations, including powering servers, networking equipment, storage systems, and cooling infrastructure. The energy demand of hyperscale computing continues to grow with increasing data volumes and computational requirements. This significant energy consumption contributes to carbon emissions, especially if the electricity is generated from non-renewable sources such as fossil fuels. Further, cooling is essential to maintain optimal operating temperatures in hyperscale data centers. However, cooling systems consume a significant portion of the energy used in data centers. Traditional cooling methods, such as mechanical chillers, can be energy intensive. Finding efficient cooling strategies, such as free cooling techniques, liquid cooling solutions, or advanced thermal management approaches, is essential to reduce energy consumption and associated carbon emissions. Transitioning to renewable energy sources is crucial for reducing the carbon footprint of hyperscale computing. By sourcing electricity from renewable sources such as solar, wind, hydro, or geothermal, data centers can significantly lower their carbon emissions.

Hyperscale Computing Market Ecosystem

Prominent companies in this market are responsible for delivering hyperscale computing solutions and services to end users via various deployment models. These companies have been operating in the market for several years and possess a diversified product portfolio, state-of-the-art technologies, and strong global sales and marketing networks. Prominent companies in this market include AWS (US), Google (US), Microsoft Corporation (US), IBM Corporation (US), and Oracle Corporation (US). The section highlights the market's key players, including connectivity providers, OEMs, solutions providers, services providers and consultants, integrators, and MSPs. The chapter provides a description of the companies offering services and solutions in the hyperscale computing market, the latest company developments related to the recession, and MarketsandMarkets’ analysis of these vendors. It further highlights the unique differentiation points of each company and its expertise in the market.

Based on vertical, IT and telecom vertical is expected to hold the largest market share during the forecast period

Based on the vertical, the hyperscale computing market is segmented into BFSI, IT and telecom, government and defense, research and academics, healthcare and life sciences, manufacturing, retail and consumer goods, media and entertainment, and other verticals. Among the verticals, the IT and telecom segment is expected to hold the largest market share during the forecast period. Hyperscale computing enables the expansion of cloud services in the IT and telecom sectors. It allows service providers to deliver scalable, on-demand resources to customers, including virtual machines, storage, and networking. This scalability and flexibility are essential for accommodating the increasing data storage and processing needs of businesses. Secondly, hyperscale computing supports the development and deployment of advanced telecommunications services. It facilitates the processing of large volumes of real-time data in areas such as network optimization, traffic management, and predictive maintenance. This helps telecom companies enhance network performance, provide a better quality of service, and deliver innovative services such as 5G connectivity and IoT deployments.

Furthermore, hyperscale computing enables efficient data management and analytics in the IT and Telecom industry. It supports the processing and analysis of massive datasets to derive valuable insights for network optimization, customer behavior analysis, and target marketing campaigns. This, in turn, helps in improving service offerings, enhancing customer experiences, and driving business growth.

Based on application, the IoT segment holds the second-highest CAGR during the forecast period

Based on the application, the hyperscale computing market is segmented into cloud computing, big data, IoT, and other applications. As per the application segment IoT segment is expected to hold the second-highest CAGR during the forecast period. IoT applications encompass a wide range of use cases across industries, including smart cities, industrial automation, healthcare monitoring, logistics and supply chain management, and connected vehicles. Hyperscale computing provides the computational power, storage capacity, and scalability required to handle the massive influx of data from IoT devices. These applications rely on hyperscale infrastructure to process and analyze real-time streaming data, enable data integration and aggregation, and support the connectivity and interoperability of IoT devices at scale. IoT applications in the hyperscale computing market enable organizations to harness the potential of IoT data for actionable insights, predictive analytics, and automation. It also facilitates real-time monitoring and control, asset tracking, predictive maintenance, and optimization of operations based on IoT-generated data. Furthermore, hyperscale infrastructure supports the secure and reliable transmission of IoT data, as well as the integration with other systems and services.

The US market is projected to contribute the largest share of the hyperscale computing market in North America.

North America is expected to lead the hyperscale computing market in 2023. The US is estimated to account for the largest market share in North America in 2023 in the hyperscale computing market, and the trend is expected to continue until 2028. In the US, the demand for hyperscale computing has grown significantly and is now a key enabler of numerous businesses and technological progress. Some of the biggest hyperscale data center operators and cloud service providers including such as AWS, Microsoft, IBM, Oracle, and Google are based in the US. These hyperscalers enable businesses to access on-demand computing resources, accelerating innovation, and fostering the growth of startups and technology-driven enterprises. The US government leverages hyperscale computing to enhance national security, conduct research, and manage large-scale public services. Federal agencies utilize cloud services to store and analyze vast amounts of data efficiently. Moreover, the hyperscale computing industry has created a substantial number of jobs, including data center management, cloud architecture, and software development roles, boosting employment opportunities nationwide, such factors have fuelled the growth of the market in the country.

Key Market Players

The hyperscale computing market is dominated by a few globally established players such as AWS (US), Google (US), Microsoft Corporation (US), IBM Corporation (US), Oracle Corporation (US), HPE (US), Alibaba Cloud (China), Tencent Cloud (China), Salesforce (US), and Huawei (China) among others, are the key vendors that secured hyperscale computing contracts in last few years. These vendors can bring global processes and execution expertise; the local players only have local expertise. Driven by increased disposable incomes, easy access to knowledge, and fast adoption of technological products, buyers are more willing to experiment/test new things in the hyperscale computing market.

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Scope of the Report

This research report categorizes the hyperscale computing market based on offering, application, vertical, and region.

Based on the Component:

• Solution
• Services
  • Consulting
  • Integration and Implementation
  • Training, Support, and Maintenance

Based on the Application:

• Cloud Computing
• Big Data
• IoT
• Other Applications

Based on the Vertical:

• BFSI
• IT and Telecom
• Government and Defense
• Research and Academics
• Healthcare and Life Sciences
• Manufacturing
• Retail and Consumer Goods
• Media and Entertainment
• Other Verticals

Based on the Region:

• North America
  • United States
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Middle East & Africa
  • Kingdom of Saudi Arabia
  • United Arab Emirates
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Developments:

• In June 2023, Oracle Cloud Infrastructure (OCI) announced the availability of new compute instances based on the 4th Generation AMD EPYC processors. These instances leverage the advanced features and performance capabilities of the AMD EPYC processors to deliver enhanced computing power, efficiency, and security for workloads running on the Oracle Cloud.
• In March 2023, AWS and Nvidia collaborated to develop next-generation infrastructure to support the training of large machine learning (ML) models and the creation of generative AI applications. This collaboration combines AWS's expertise in cloud computing with Nvidia's industry-leading GPU technology. The collaboration aims to address the growing demand for computational power and specialized hardware required for training increasingly large and complex ML models.
• In July 2022, AWS to expand its portfolio included memory-optimized Amazon EC2 R6a instances featuring AMD EPYC (Milan) processors 10 percent less expensive than comparable x86 instances. High-performance computing and video processing workloads, which benefit from decreased network latency and highly scalable inter-node communication, are supported by Elastic Fabric Adapter (EFA) on R6a instances, which are built on the AWS Nitro System.

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