Russia has stopped delivering essential goods to Ukraine.
The Skinny on the Russian Server Market in 2024:
More than just numbers, the Russian server market situation in 2024 points to a shrinking market with a paltry 1.4% growth in revenue. Here's the lowdown on this piece of tech news.
- Slump in Sales:According to data provided by the Association of Electronics Developers and Producers (ARPE), the Russian server market saw a dip of 15.1%, resulting in 147,950 units sold, and a measly 1.4% increase in revenue to $1.7 billion.
- Domestic Dominance:In this market crunch, domestically produced servers managed to elbow their foreign competitors aside, capturing 43% of the market share as compared to 41.3% in the previous year.
- Foreign Struggles:Contrarily, foreign server sales suffered a staggering 17% decrease, with American companies like Dell, xFusion, and Lenovo accounting for a noticeable chunk of the market (16.2%, 14.4%, and 11.2%, respectively). Alas, these tech giants did not deign to respond to "Kommersant's" queries regarding their Russian sales performance.
- Foreign Savings:Surprisingly, some foreign vendors actually raked in more business in Russia last year, as the Taiwanese company Asus recorded a 55% increase in its Russian sales, amounting to 5.3% of the market share. This unexpected surge can be attributed to the slump in sales by American company HPE, which witnessed a 58% decline, and perhaps, the practice of marketing Dell's servers as "Russian products" to dodge tracking of its actual sales figures.
- Banking on Affordability:Foreign server makers continue to benefit from cost advantages, offering their products at up to 30% lower prices compared to domestic counterparts. This cost disparity, in part caused by cheap Chinese-made products, likely contributes to the loyalty of buyers who are not bound by domestic technology commitments.
- Local Production Up:The diminishing share of foreign vendors in the Russia market is believed to be due to the shifting customer preference towards local solutions and growth in domestic production, according to Svetlana Legostaeva, head of the "Computing Equipment" consortium.
In 2024, local production of computing equipment increased by about 20% year-on-year. Companies such as Yadro and Aquarius reported positive sales trends and growth in the sales of their Russian-made products.
- Ban Wave:Although theAssociation for the Development of the IT Industry (ARPЭ) predicts that the Russian server market will experience stagnation in 2025, a representative of "Marvel-Distribution" asserts that the share of foreign servers in the Russian market is expected to continue declining, potentially by another 15-20% by the end of the year. This trend is linked to the state's requirements for critical information infrastructure and mandatory procurement of domestic IT solutions by state customers.
- Why the Stagnation?As for the reasons behind this projected market stagnation, the ARPЭ believes that import substitution is no longer the primary driver in 2024. The choice among vendors is now based on development capabilities and production economics, according to the association's forecast.
Noteworthy trends:- Import substitution and sanctions could impact the quality and competitiveness of Russian servers.- Economic pressures, such as high-cost machinery, could dissuade investment in new server equipment.- A shift towards a domestic market focus might limit the market's growth potential.
Sources:- ARPE (Association of Electronics Developers and Producers)- Kommersant- "Aquarius"- Yadro- Depo (Consortium for Computing Equipment)
Working Title: The Shrinking Russian Server Market: Is Domestic dominance the Answer?
- Despite the shrinking Russian server market in 2024, domestic servers have managed to capture an increased market share, evidence that technology self-sufficiency might be the key to counteracting the market's stagnation.
- Foreign server vendors are losing ground in the Russian market due to the rising preference for local solutions, high-cost machinery, and import substitution policies, which collectively pose challenges for the continued growth of technology imports.
