The external OEM enterprise storage systems (ESS) market reported annual growth of 3.1% in the third quarter of 2024, a relatively low growth from the weak third quarter of 2023. The market is going through a longer and moderate recovery cycle after declines in 2023 as spending remains below the levels of 2022. The main reasons for the soft performance of the external ESS market at the times of incredibly high growth in spending on servers for building up infrastructure for AI workloads are the allocation of the larger portions of budgets to support the latter and, consequently, continuous growth in deployments of server-based storage to support growing needs of AI workloads.

IDC expects that most rebounding of the external ESS market will be pushed into 2025 as the strong growth in investments into computing infrastructure will start slowing down. Positive developments and drivers for growing demand include increasing demand for flash storage (typically, all-flash arrays) to support projects related to artificial intelligence and growing demand for dedicated infrastructure as a service solutions as companies and service providers are moving forward on the learning curve.