Originally Published on Technavio | Hyper Converged Infrastructure (HCI) Market by Component, End-user and Geography - Forecast and Analysis 2023-2027

The Hyper Converged Infrastructure (HCI) market is poised to grow significantly, with an estimated Compound Annual Growth Rate (CAGR) of 27.98% between 2022 and 2027. This growth is projected to result in a substantial increase of USD 58.94 billion in market size. Several factors, including the increasing demand for data protection, total cost of ownership (TCO) reduction, and simplified management, are key drivers for this market. HCI systems merge storage and computing functions into a single, highly virtualized server-based solution. They offer rapid deployment compared to traditional data center systems and eliminate the need for multiple experts to manage different components. HCI's ability to work with commodity hardware is a significant advantage.

**Hyper Converged Infrastructure (HCI) Overview**:

HCI systems consolidate storage and computing resources into a single, highly virtualized solution, streamlining data center management.

**Market Drivers**:

A primary driver of HCI market growth is the rising demand for data protection. HCI systems are increasingly adopted by organizations because they provide on-demand infrastructure benefits for data-intensive workloads like VDI and databases while keeping data safely within on-premises data centers. This is especially important due to regulatory compliance issues concerning data storage, such as in regions like Turkey. HCI offers data protection features including snapshots, replication, and encryption, which contribute positively to market growth.

**Market Trends**:

A notable trend in the HCI market is the separation of compute and storage nodes. This design enhances scalability, allowing users to add or remove nodes according to their requirements. HCI solutions initially faced challenges associated with adding entire server nodes with both compute and storage capacity. However, many providers have addressed this issue by introducing separate storage nodes, like Nutanix, which uses separate storage-only nodes for users who need to scale their storage. This separation offers flexibility in deploying both storage and compute capacity based on business needs, further boosting HCI market growth.

**Market Challenges**:

HCI appliances' lack of data services poses a significant challenge. Unlike storage arrays, which include data services like deduplication and compression to optimize storage capacity, HCI systems lack advanced data services such as large-scale deduplication and real-time replication. Additionally, HCI appliances often struggle to provide Quality of Service (QoS) that guarantees minimum and maximum levels for applications. This absence of data services negatively impacts HCI market growth and may hinder growth during the forecast period.

**Segmentation by Component**:

The solutions segment is expected to witness substantial growth, with key HCI components including hardware like monitors and CPUs used in HCI systems. HCI hardware integrates computing, storage, and networking components into a single physical system, allowing resource pooling and management through software. The growth of this segment may be slower in the long run due to hardware's extended shelf life compared to software-based solutions.

**Segmentation by End-User**:

The financial institution segment is projected to contribute significantly to market growth. Financial institutions rely on local IT infrastructure managed centrally. HCI systems are increasingly adopted by these institutions, especially for remote office/branch office deployments. HCI offers a cost-effective data center solution with integrated computing, storage, and networking, and its scalability aligns with the requirements of financial institutions.

**Regional Overview**:

North America is expected to be a major contributor, representing 47% of global market growth during the forecast period. The region's early adoption of advanced technologies and its favorable environment for data center innovations are key factors driving HCI market growth. The presence of prominent HCI market players with strong collaborations further contributes to this growth. Adoption of HCI systems across various enterprises, especially for on-premises data center solutions and data protection, propels market growth in the region.

**COVID-19 Impact**:

The COVID-19 pandemic had mixed effects on the HCI market in 2020. While workplace closures resulted in increased unemployment, it also accelerated digitization, leading to higher demand for HCI systems. In 2021, as vaccination drives and eased restrictions restored operations, the HCI market was expected to grow further.

**Customer Landscape**:

The HCI market industry report explores the adoption lifecycle of the market, from innovators to laggards, and evaluates purchase criteria and price sensitivity to assist companies in their growth strategies.

**Major HCI Market Companies**:

Companies employ various strategies such as alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches to enhance their market presence. Some key HCI market companies include AT&T Inc, Cisco Systems Inc, DataCore Software Corp, Dell Technologies Inc, and more.

**Segment Overview**:

The HCI market report forecasts revenue-based growth at global, regional, and country levels. It provides an analysis of the latest trends and growth opportunities in components (solutions and services), end-users (financial services, healthcare, education, government, others), and regions.

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