Computer Hardware Industry Report

The global computer hardware market continues to see strong compound annual growth rates (CAGR) thanks to increasing personal computing use, globalized supply chains, ongoing growth of the Internet, growing remote work infrastructure, data center expansion, sustainable hardware practices, the development of smart cities, edge computing, AI machine learning, modular systems, biometric security, cloud computing, and advancements in operating systems.

Market Segmentation

By type, the computer hardware market is segmented by:

• Computer Peripheral Equipment

–   Keyboards and Mice

–   Monitors

–   Printers and Scanners

–   Speakers and Headsets

• Computer Storage Devices and Servers

–   Hard Disk Drives (HDD)

–   Solid State Drives (SSD)

–   Network Attached Storage (NAS),

–   Servers (Rack-Mounted, Blade Servers)

• Computers

–   Desktops

–   Laptops

–   Workstations

–   All-In-One PCs

By distribution channel:

• Online
• Offline

By end-user:

• Household
• Commercial

Key Market Trends

The major players in the computer hardware sector are always introducing innovative new products to drive revenue. Innovations in AI, machine learning, and cloud computing are increasing demand for high-level hardware solutions, including computer peripheral equipment, storage devices, and servers. These technologies are vital to other sectors that rely on high-performance computing, such as gaming, healthcare, and automotive.

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Growth in gaming, e-sports, and virtual reality applications will continue to create significant opportunities for businesses in the computer hardware sector. Gaming is becoming increasingly mainstream, and VR is advancing across entertainment, education, and enterprise sectors. This means there will continue to be more demand for high-performance computer peripherals, storage devices, and servers. Companies that develop advanced graphics cards, processors, and storage solutions designed for the gaming and VR markets will benefit from these opportunities.

The computer hardware industry is on pace to see significant investment growth when it comes to smart city projects in many countries around the world. Smart cities use information and communication technologies to efficiently manage and operate urban services. This includes transportation systems, water supplies, and law enforcement. These technologies use technology enabled by the Internet of Things (IoT), which connects computers and mechanical and digital devices. These systems make it possible to transfer data over a network with very little human involvement.

The growing information technology (IT) industry is driving growth in the computer hardware sector. IT plays a major role in computer hardware as it advances the design, deployment, manufacturing, management, and maintenance of hardware components and systems.

More technology companies are ushering in the use of tablets to replace laptop computers to offer consumers more portability, 5G network connectivity, and lightweight design, as desktop computer usage falls by the wayside by everyday users, except for in niche industries.

The popularity of remote work, online education, and the use of cloud-based services is also contributing to the increased need for computer hardware. More companies and individuals are investing in high-quality devices to meet their digital lifestyle needs. Additionally, industries such as finance, education, and healthcare are also seeking more advanced computer hardware solutions to facilitate business continuity and make operations more efficient.

There is also an increasing focus on cybersecurity and data protection that is driving demand for advanced networking solutions and robust security hardware. As there are significant opportunities for businesses operating in this area, companies focus on research and development to implement sustainable practices, reduce environmental impacts, and appeal to environmentally conscious users. It is important to keep in mind that geopolitical and macroeconomic factors do present unforeseen obstacles for the computer hardware industry, yet the outlook remains positive for companies in the market.

The computer server sector is also positioned for significant growth, especially in North America and China, as they invest substantially in IT infrastructure and technological advancements. The increasing adoption of cloud computing services is a key driver of growth in the server space, as hyper-scale data centers require massive numbers of servers. The proliferation of big data analytics and the IoT is also driving high demand for servers for increased processing power and storage capacity. Further, AI and machine learning are creating more demand for high-performance computing (HPC) servers.

The modernization of data centers is another major factor driving growth in the server market, as companies are upgrading to more energy-efficient and scalable servers. There is also the area of virtualization technologies, which is creating a major need for server use and optimized resource allocation.

M&A

The computer hardware industry is moderately concentrated, dominated by several large global corporations, and supported by numerous smaller companies specializing in niche segments. In any case, innovation is crucial, focusing on advancements in processing power, memory capacity, and miniaturization.

Significant capital investments by big tech firms are causing reverberations throughout the value chain, creating positive M&A opportunities, especially involving data centers, energy solutions, and infrastructure that support them. This drives investment interests in creative and efficient carbon-free energy solutions like nuclear power.

Competition for hardware comes from product substitutes, such as cloud computing services. There is strong end-user concentration in sectors such as enterprise and government, but the consumer market is much more fragmented. Mergers and acquisitions activity involves strategic acquisitions designed to consolidate market share and expand product portfolios. M&A deals across the computer hardware industry are also being driven by private equity firms seeking to deploy previously accumulated capital.

Most billion-dollar mergers in the sector focus on increasing scope to expand the company’s product range with synergies on the revenue side. More than half of these deals are about growing scale.

Corporations are investing in higher-growth market segments such as data analytics, automation, language processing, and generative AI to supplement their current offerings and get better positioned for future growth opportunities.

While AI is a hugely popular investment area, it is not always a positive for mergers and acquisitions because of strict compliance regulations, especially in certain regions. Dealmakers must keep these issues in mind if the buyer and the seller are in different countries or continents. AI is also playing a more prominent role in national security, which is leading to increased government scrutiny of cross-border deals.

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