Data centres to drive exponential increase in server demand: Lenovo

Lenovo India expects rising data centre investments and AI infrastructure demand to double or triple the country's enterprise server market over the next few years

Lenovo India expects the surge in demand for data centres in India to exponentially drive up its enterprise and artificial intelligence (AI) server business in the next two to three years, said Country Head Shailendra Katyal. 

Though the server business is still small compared to the personal computer, smart devices, and managed services busines­ses, it still holds an 8-9 per cent market share, putting it right behind Dell and HP. The total market size is currently about $2 billion. 

“It’s a small business market but likely to expand with all the data centre tax holidays the government announced in this year’s budget. We’re seeing a lot of action. So, the combination of data sovereignty and data protection is creating a very positive force for a lot of server demand,” Katyal, vice president and managing director, Lenovo India, told Business Standard in an interaction. 

India’s power demand in its data centre business is expected to touch about 8 gigawatt (Gw) by 2030, according to research firm Jefferies, up from about 1.5-1.7 Gw last year, as hyperscalers po­ur billions of dollars in AI infrastructure. Almost 70 per cent of it is now being driven by Google, Amazon Microsoft and Meta. Such AI data centres also need sophisticated servers and racks for higher compute, which also drives the need for more power. 

Lenovo says the ecosystem has moved significantly toward graphic processing unit (GPU) servers, which are dominated by Nvidia, away from standard traditional servers. 

“But I think we have a relevant play in both. In the traditional part too, our share is going up. And on the GPU side, we announced gigafactory capability with Nvidia. So, anyone who wants to set up a giga capacity, we will be able to ramp that up,” adds Katyal. 

According to him, the infrastructure market is usually about 50-60 per cent the size of the personal computer market globally. In India, with a PC market of about $12 billion, the percentage is just about 17 per cent. 

“This is what’s likely to change. This is still on the standard server side without the AI servers. So, the $1.8 billion market has to go up and should become twice or thrice its current size because now there is pressure to have data centres within India.” 

He said it’s difficult to immediately predict how big Lenovo’s slice of that pie will be as the policy incentives are new. Predicting the numbers becomes tricky as soon as the infrastructure is built based on GPU demand, and it will take a few years to assess. 

Lenovo India’s revenue for the last financial year was about $4.2 billion, up 23 per cent compared to a year earlier, which was about 5 per cent of the company’s $83 billion. The growth was led by the PC business, where the company is ranked number three with 21 per cent market share behind Dell and HP. 

 

With many customers gravitating towards AI and gaming PCs, Lenovo has a market share of 25 per cent in gaming PCs.