Turkey’s External Disk Storage Market Defies the Downturn, but Ongoing Instability Stifles Enterprise Server Sales

Continuing political and economic instability in Turkey is having a mixed impact on the country's enterprise hardware market, according to the latest findings from International Data Corporation (IDC). Comprising revenue from enterprise servers and external disk storage systems, the overall market was down 1.4% year on year in 2013 following an 8.1% dip in spending on server hardware. Spending on external storage, however, expanded 9.6% over the same period, courtesy of strong demand stemming from explosive data growth, mandatory regulatory requirements, and the need to replace outdated legacy infrastructure.

The finance and telecommunications sectors, in which business continuity and disaster recovery are crucial, are the main drivers of the strong growth currently being seen in the external storage market. Various public sector organizations are also investing in external storage solutions as part of a growing focus on cost optimization and operational efficiency, while investments in a number of ICT-related government initiatives aimed at advancing public services are also adding to the demand.

The same three sectors are also the primary investors in enterprise servers, but the market continued to decline in 2013 as a result of shrinking margins, large projects not being repeated, and the effects of fluctuating exchange rates on the country's business environment, particularly within the SMB segment. The market is also being hampered by a strong downward trend in non-x86 servers, with sales falling 27.0% year on year in 2013. Sales of x86 server saw marginal growth of 0.6% over the same period.

Looking forward, IDC predicts a moderate increase in revenue for Turkey's combined enterprise hardware market in 2014, spurred by investments in new datacenters and extensions to existing facilities. The server segment will return to a state of growth, with IDC forecasting an increase in sales of 1.8% year on year on the back of strong demand for x86 servers as part of the FATIH project. However, this relatively short-term spike in sales cannot mask an overall downward trend.

"If we exclude the FATIH project, the enterprise server market will continue to decline in 2014," says Aslı Kockal, a senior research analyst at IDC Turkey. "The unstable economic and political outlook (including presidential elections in August) and subsequent constraints on IT budgets will continue to stifle demand. Additionally, the trend for server virtualization is gathering pace and is negatively impacting hardware shipments in terms of units, although the impact on the average sales price (ASP) is positive as the servers needed for virtualization must have high-level configurations."

The outlook for external disk storage systems is more positive, with IDC projecting year-on-year growth of 4.3% in 2014 thanks to increased competition within the market and growing demand from its most active customers. "Over the last three years, service providers, telecom players, systems integrators, and hosting companies have been steadily growing their revenues and extending their capabilities," says Kockal. "These providers, which share their resources, are the main users of storage solutions and are increasing their investments accordingly. Additionally, many organizations have been forced to make investments in the archiving and protection of data, including the implementation of disaster recovery solutions, a situation that will continue to stimulate storage spending in Turkey over the coming months."

IDC's 'Turkey Enterprise Infrastructure Solutions Market 2014–2018 Forecast and 2013 Analysis' study provides detailed analysis, conclusions, and forecasts regarding the dynamics of the enterprise hardware solutions market in Turkey. The information in this study is intended to provide an understanding of the changes and opportunities facing the enterprise hardware industry in this emerging market. The topical data and analysis are based on information gathered from interviews with the leading IT companies (vendors, distributors, assemblers, systems integrators, and value-added resellers) in the enterprise hardware solutions market. Data is broken down by vendor, market value share, product category (x86 and non-x86 servers and external storage systems), installation, price band, and operating system.