Skip to content
Home » Blog » Why are IT infrastructure sales growing and will it continue?

Why are IT infrastructure sales growing and will it continue?

  • by

Analysts Context report that IT infrastructure sales are enjoying healthy growth, up 49% year-on-year to mid June. What lies behind these numbers? Another analyst, Mordor, supports this, saying that the enterprise networking sector is on a growth path from $ 65 billion in 2018 to $ 111.36 billion by 2028. Statistics won’t necessarily show this but could the increased sales figures merely reflect inflation and higher sale prices? I am curious to understand what lies behind these statistics and if the growth is likely to continue longer term, so have been looking for more research to try to understand the trends.

Why are enterprise networking sales so strong?

There are several reasons why enterprises are investing in their networks at the moment. First, there are changes within organisations. There is a strong trend for companies to move to cloud computing and its variants. Within IT departments, they are working with larger datasets and moving to SaaS solutions so they need more bandwidth. Meanwhile, newer technologies such as virtualization and SD-WAN have reached maturity and are rolling out more widely. IT departments are looking to digitise more services and need to upgrade their networks to transport more data and to do it faster but they want to cut energy consumption too, so these are all reasons to invest and purchase new equipment.

We are also seeing changes in they way people work within enterprises. Employees seem to be settling into hybrid office arrangements which support remote working as well as office-based working. Perhaps this requires additional hardware to support working in both locations.  Add to this the fact that we are using more mobile devices such as tablets and IoT devices in our work. These need to be connected into enterprise networks as well as the usual PCs and laptops. This goes hand in hand with the trend to use more Wi-Fi in the enterprise and the move to 802.11ac. All this adds up to an increased spend on networking hardware per employee.

These could be some of the reasons why enterprises are investing in new, faster networking technology.

What else drives IT infrastructure sales?

I think it is true to say that we have come through the Covid-19 pandemic and that we are settling into a “new normal” way of working. During Covid shortages of parts hindered supplies of hardware at a time when millions of people suddenly needed new laptops to work from home. Those shortages should be resolved by now or at least should not be so severe. If people are making those delayed investments now, this could partially explain the current high level of sales. I have written a number of client case studies about companies that rolled out solutions to enable working from home during the pandemic, but it may be that the organisations delayed planned network upgrades in order to put working from home in place and are returning to those now.

The telecoms sector is building new networks as well. Mobile operators are building 5G networks and deploying small cells in cities. These also require large amounts of hardware and will be contributing to the sales of networking hardware.

Governments investing in network infrastructure

Government projects can be huge, so huge that often governments invest in infrastructure to try to kickstart national economic growth. When this happens government spending could make up quite a big part of sales in a particular market sector. At the moment governments worldwide are investing in smart cities infrastructure, especially in developing countries which are moving straight to modern digitized services, without evolving through the older generations of technology.

There’s a particularly large project in the US. The American Defense Systems Information Agency is upgrading its Digital Information Systems Network with a spend of up to $1.5 billion. This is one single project that is large enough to make an impact on global sales figures.

Who are the winners in enterprise networks sales and will the growth continue?

Who are the winners in all this? The big networking suppliers should have a good few years. Cisco Systems, Hewlett Packard Enterprise, Huawei Technologies, Juniper Networks and Arista Networks are probably the top five, but any company that supplies networking hardware or related components and solutions should see healthy growth in the short to medium term. And according to Statista, service providers who offer infrastructure as service have the biggest opportunity of all, their sales are expected to be worth $165.25 million.

If you found this article interesting, click below to find more: