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How the Data Center Market Benefits Tech as a Whole

By: Kayla Matthews on February 3, 2020

The data center market is taking off at such a rapid pace that numerous tech companies realize that being associated with it could boost the sector as a whole. Here's a look at how the data centers' success has far-reaching effects.

Intel Releases an Upbeat Financial Forecast

Intel recently posted strong fourth-quarter earnings for 2019, and the company attributes that in large part to data centers. For starters, the company enjoyed healthy sales of its high-margin products, including the most advanced processors it offers for data centers. 

Also, Intel expects the good financial news to continue throughout 2020, too. It expects annual sales to reach $73.5 billion, although analysts gave a slightly lower estimate. Intel benefits from the data center boom since the server farms that store massive amounts of information need the chips that the company builds. 

The picture is not wholly rosy for the company, however. Its challenges for the year ahead include meeting customer demands for processors and dealing with possible chip shortages. Despite those obstacles, Intel recognizes that data centers are a large part of what helps the brand thrive. And it's not alone. 

NVIDIA Also Benefits From the Data Center Boom

NVIDIA is another tech company that can directly link its recent success to the data center uptick. More specifically, though, NVIDIA specializes in chips for gadgets that collect information that gets sent to data centers for later processing. Statistics published in 2018 showed that NVIDIA's data center segment of its business had seen an 83% increase over the previous year.

That's due, in part, to companies within the cloud computing space, such as Google and Amazon, relying on NVIDIA's graphics chips to handle computations that are a bit too robust for Intel's server-based chips. For example, some chips assist with voice recognition or detecting the differences between a pedestrian and a stop sign.

Data Center Improvements Can Attract New Customers

People often don't account for how many of their daily tasks require data centers to work. If they order food from an app or use a digital map service to get directions, data centers played a role in making those activities possible. Also, the emergence of streaming services from major brands like Apple and Disney indicates that people are interested in staying home to get entertained.

Beyond entertainment, data centers let people shop online or use the internet to take classes and connect with friends. As online activities become increasingly ingrained in people's lives, data centers will work in the background to keep those diversions occurring smoothly and without service outages. 

Some brands within the data center sector saw profit boosts by making purposeful improvements. SCC, a Pan-European IT services firm, invested in its data centers within the United Kingdom and saw a 10% year-on-year increase as a result.

Much of the company's profits in the data center sector come from government bodies within the United Kingdom. The government sector, in particular, needs assurance of reliability from data center providers. 

But, the company has its future sights set on cognitive computing and artificial intelligence (AI). Data center brands are well-poised to succeed when they can prove to current or potential customers that they have the resources that allow offering reliable services and giving uptime guarantees.

Deciding to enhance data centers may encourage existing customers to renew their contracts while making those brands appealing to new customers. 

Data Centers Impact All Segments of Tech

These examples show that when data centers do well, so do the companies that supply the technology to help those facilities function. However, the positive influence of data centers extends beyond hardware and processing. If any company wants to manufacture a gadget or app that collects or provides information, it likely needs data centers to make that idea functional. 

Thus, as well-established or newly created tech brands determine what new fantastic offerings they'll give the world, they'll almost certainly have to decide which data center locations or brands can meet their needs.

As that happens, the data center market should continue to excel as individuals and businesses benefit from technologies that could not exist without the resources that data centers provide. 

 

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