A deep dive into the current state of server and client computing devices.
Introduction
Computer hardware is an integral part of our lives, especially in the modern workplace. Servers form the foundation our increasingly digital economy is built upon, and the vast majority of employees depend on client computing devices to complete essential daily tasks and communicate with colleagues.
Our annual State of IT report — a global survey of 1,000+ IT professionals — offers many insights into IT spending and tech adoption plans across hardware, software, cloud, and managed services. Our findings affirm that computer hardware is still as important as ever, accounting for the largest portion of overall tech spending at 30% of overall IT budgets.
In this special report, we’re diving into future and historical hardware data from the State of IT, sharing previously unpublished data to offer even deeper insights into laptop, desktop, and server trends we’ve observed over the past several years. Our in-depth findings highlight tech adoption plans that reveal spending shifts and opportunities for vendors as businesses modernize tech infrastructure to prepare for an increasingly hybrid future.
Key Highlights
- Usage of AMD-powered hardware is poised to grow: Within two years, business adoption of AMD processors is expected to rise to 60% for PCs and 44% for servers.
- Storage acceleration trends continue: More than two-thirds (68%) of enterprises (500+ employees) plan to adopt all-flash storage arrays within the next two years.
- More than half (57%) of enterprises expect to adopt “pay-as-you-go” consumption-based infrastructure by the end of 2023.
- Most (54%) businesses plan to use speedy NVMe storage technology in their on-premises servers by the end of 2023.
- Adoption of ARM server processors is poised to double from 11% of businesses currently to 22% within the next two years.
- Driven by the shift to remote work, companies now spend significantly more on laptops than on desktops (19% of hardware budgets vs. 14%, respectively).
Servers Remain Vital, Even as Cloud Ascends
Much has been made of the shift from on-premises infrastructure to the cloud in recent years.
Our 2021 Cloud Trends report revealed that 40% of workloads are running in the cloud today, with that figure expected to rise to 50% by 2023. Additionally, our multi-year State of IT research shows cloud spending growing over time, increasing from 22% of overall IT budgets in 2020 to 26% in 2022.
During the same time period, new on-premises server investments have decreased. Overall hardware spending has dropped from 33% of IT budgets in 2020 to 30% in 2022. Within the hardware category, server spending accounted for 14% of hardware budgets in 2020 but will represent only 11% in 2022.
But make no mistake: On-premises servers remain extremely important to organizations worldwide. The majority of workloads today are still running locally, and in 2023 almost all organizations (94%) will still use on-premises servers in some capacity.
All this to say, cloud won’t fully replace local servers in the future. Instead, on-premises and cloud infrastructure will co-exist and grow increasingly interoperable, allowing for greater portability and flexibility that will benefit organizations in a hybrid world.
The Evolution of On-Premises Servers
For years, Intel was by far and away the dominant player in the server and client processor market. That is, until 2017, when AMD launched it’s powerful and cost-effective Epyc and Ryzen chips, which many IT professionals viewed as a legitimate challenge to Intel’s dominance.
At the time, many companies that didn’t use AMD chips were enticed by the company’s latest offering. In a 2017 Spiceworks poll of nearly 1,500 IT professionals, 61% of respondents said the launch of the new generation of chips made them more likely to consider using AMD.
Usage of AMD-powered hardware is poised to grow: Within two years, business adoption of AMD processors is expected to rise to 60% for PCs and 44% for servers.
Since then, the adoption of AMD chips has grown steadily. A Spiceworks State of Servers report found that 16% of businesses used AMD server chips in 2019. The latest 2022 State of IT findings reveal that 30% of companies use servers powered by AMD processors, and adoption of AMD-powered servers is expected to rise to 44% of businesses by the end of 2023.
AMD isn’t the only chip giant looking to disrupt the status quo. In recent years, energy-efficient ARM-based chips have also emerged as a viable alternative. Going forward, we see adoption rates of ARM server chips doubling from 11% today to 22% by 2023. IBM servers are poised to grow from 18% adoption to 27% by the end of 2023.
Over the next two years, adoption levels of non-Intel server processors are expected to be higher in larger organizations. Among enterprises (500+ employees), 61% plan to use AMD chips to power servers by the end of 2023, 51% will use IBM, and 43% plan to adopt ARM.
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Server Room Storage Evolution
It’s often said that computing infrastructure is only as fast as its slowest bottleneck, which has historically been storage. Perhaps that’s why organizations are increasingly using fast flash storage technologies in lieu of traditional spinning hard disk drives. And with falling prices making flash more affordable in recent years, these once out-of-reach technologies are more attainable.
Local flash storage is now common in servers around the world, and their use in external flash SAN and NAS devices are growing in popularity as well. The majority of companies (55%) use local SATA-based SSDs in servers, with an additional 14% planning to within two years. SAS SSD adoption levels in servers currently stand at 40%, with an additional 16% of companies planning to use SAS-based SSDs within two years.
In recent years, the biggest jump in local flash storage adoption has been with ultra-fast NVMe storage tech, which offers big performance gains over already speedy SATA and SAS SSDs.
In our 2019 State of Servers report, 13% of businesses reported using NVMe locally in their physical servers. In our 2022 State of IT research, 37% of companies reported using NVMe storage in servers, with an additional 17% of companies planning to use the technology by the end of 2023.
Current NVMe adoption rises even higher to 45% of enterprises (500+ employees).
We’ve also seen growth in external flash storage; 24% of companies currently use all-flash storage arrays, and an additional 20% plan to by the end of 2023. In our 2019 State of Servers report, only 14% of businesses reported using the technology.
Like NVMe flash, the adoption of external all-flash storage arrays jumps higher in larger companies. Only 14% of the smallest companies (1-99 employees) currently use all-flash storage, compared to 39% of enterprises.
Looking forward, an additional 29% of enterprises plan to start using all-flash storage arrays within two years, compared to only 13% of the smallest companies.
The Evolution of Server Room Capabilities
It’s a given that infrastructure will grow faster across compute, storage, and networking infrastructure as server room hardware evolves. For example, our 2020 State of Networking report found 92% of companies used Gigabit Ethernet, and 45% planned to upgrade to even faster standards within two years.
Server room technology is also getting smarter. Our data indicates that companies will increasingly employ on-premises features and technologies that allow for greater resilience, flexibility, and ease of management.
Among the advanced capabilities, embedded remote management (e.g., Dell’s iDRAC, HPE iLO technologies) made the top of our list with a 56% adoption rate. Most companies (55%) also have fault tolerance/failover capabilities in place that allow for business continuity in the event of hardware failure — often implemented through virtualization and hyperconverged systems.
Less popular but still common, roughly one-third of organizations currently have the following server room capabilities:
- Software-defined storage (39%)
- Server automation / orchestration (37%)
- Software-defined networking (36%)
- Integration with a public cloud (36%)
- Workload migration (34%)
Going forward, the biggest growth areas will be in capabilities that enhance automation: Within two years, 20% of companies plan to add server automation/orchestration capabilities, and an additional 20% plan to start using automatic issue remediation.
Fogging the Lines: The Hybrid Infrastructure Future
Speaking to on-premises infrastructure existing side-by-side with cloud infrastructure, two capabilities, in particular, are worth investigating. Currently, 36% of organizations have integrated their on-premises infrastructure with a public cloud (often referred to as hybrid cloud), such as AWS or Azure. Within two years, an additional 18% plan to implement this capability, meaning the majority of companies are expected to have hybrid cloud capabilities by the end of 2023.
Already, nearly half (49%) of enterprises (500+ employees) are hybrid cloud-capable, compared to approximately 29% of SMBs (1-499 employees). Enterprises plan to add this capability at a faster rate going forward, with three out of four enterprises planning to integrate with a public cloud within two years.
In recent years, the consumption-based billing model associated with cloud computing has made its way to server rooms in organizations worldwide. Instead of buying their hardware outright, businesses can now opt for “as-a-service” billing for on-premises infrastructure.
This model allows businesses to essentially rent their hardware, paying as-they-go on a usage basis. Several hardware manufacturers offer these solutions — designed with cloud integration in mind — which pull on-premises and cloud payment models and technology stacks into alignment.
57% of enterprises expect to adopt “pay-as-you-go” consumption-based infrastructure by the end of 2023
While only 25% of organizations use this consumption-based infrastructure technology today, it’s poised for growth, especially among larger companies. Among enterprises, 39% have adopted the technology, with an additional 18% planning to adopt it within two years — at which point it will be used by most of the large organizations (500+ employees).
Large Enterprises Lead the Way
In our 2022 State of IT in Enterprises vs. SMBs report, we discussed how larger businesses typically have more resources to dedicate towards IT than small and medium organizations. In general, enterprises have more workforce, money, and knowledge devoted to experimenting with the latest and greatest technologies.
There are 140K mid-market and enterprise accounts showing elevated intent in hardware topics.
As with cloud integration and consumption-based billing, enterprises are more sophisticated in using newer server room technology compared to smaller organizations. For example, enterprise adoption levels are more than double those of the smallest businesses for technologies such as automated workload balancing, workload migration, and automatic issue remediation.
The Evolution of End-User Hardware
Until very recently, desktops were king in the workplace. While they aren’t particularly portable, they have a big advantage over laptops because they’re cheaper to maintain. Importantly, desktops are more durable, less accident prone, and easier to repair.
Today’s pandemic-induced remote work climate places much more importance on portability and flexibility. After all, it’s quite difficult to lug a desktop and monitor between home and office.
In our 2018 SWZD study on computing devices’ lifespan, we found that 68% of organizations were using desktops as the primary computing device in the workplace. Our 2022 State of IT report shows approximately 40% of employees using laptops and 40% using desktops.
However, as a percentage of hardware budgets, companies spend significantly more on laptops (19%) than desktops (14%). This reallocation of spending happened during the pandemic, with the shift to remote work serving as the catalyst.
Note: 2020 data was gathered before the emergence of the COVID-19 pandemic
Device preferences vary by region, with 44% of North American employees using desktops as their primary device, compared to 35% in Europe, 29% in LATAM, and 27% in APAC.
While employees outside North America are most likely to use laptops, mobile devices (smartphones and tablets) are also popular. Currently, one in five employees in APAC and three in 10 employees in LATAM primarily use a mobile device for work.
To explain this phenomenon, in our special report on the 2022 State of IT in LATAM, we quoted sources suggesting that, because LATAM-based organizations don’t have as many legacy systems in place, they’re able to adopt newer technologies without having to worry about compatibility with older hardware or platforms. The lower cost of mobile devices likely contributes to preferences in the region as well.
Processor Trends in End-User Devices
As with servers, Intel is the dominant player in the client processor market. However, the gap between Intel and AMD is not as large as it is with servers. Currently, almost half of businesses (47%) use AMD chips in desktops and laptops, compared to 30% for servers. Within two years, the adoption of AMD chips in client devices is expected to rise by an additional 13%.
Speaking to the growing popularity of non-Intel chips, approximately one in four organizations are using ARM-based chips in client devices.
Currently, 24% of organizations use Apple’s ARM-based M1 chips, with an additional 13% planning to within two years. Likely due to the proliferation of Chromebooks, 21% of companies use other ARM chips in client devices, with an additional 13% planning to within two years.
The Continuing Evolution of On-Premises Hardware
Computer hardware continues to advance and evolve with each passing year. As businesses modernize their devices and infrastructure, they’ll enjoy faster performance, more efficiency, and advanced functionality to push their businesses forward.
As to the processors powering their devices, businesses are open to using multiple vendors in a competitive environment shaped by remote work and the shift to the cloud.
By 2023, we expect 50% of workloads to run in public clouds, up from 40% today. However, hardware still represents the largest IT spending category and physical servers are here to stay. Instead of disappearing, they’ll evolve to integrate more seamlessly with cloud infrastructure, allowing organizations more flexibility to suit their needs.
With enterprises paving the way forward, organizations of all sizes will continue to add capabilities to automate processes, increase resilience, and simplify on-premises infrastructure.
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Methodology
To facilitate a holistic view of the current and future state of hardware tech, SWZD combined 10+ years of historical IT spend and adoption data with the hardware portion of their 2022 State of IT research. The 2022 State of IT survey was conducted in July 2021 and included 1,145 IT buyers from organizations across North America and Europe. Data was also collected in APAC and LATAM, which will be reported separately because it cannot be trended with previous waves.
