Maddy Osman Bare metal dedicated servers have long been a preferred option for midsized and large organizations that require the level of control and computing power that these servers offer.
However, as cloud computing continues to gain traction, more of these businesses are looking for cloud-native solutions that offer the same benefits.
That’s where bare metal cloud servers come in. They offer the instant provisioning and flexibility of cloud computing with the processing power and resources of traditional dedicated servers.
For those who are still on the fence about moving their on-site server infrastructure to the cloud, this article will provide a market overview, growth statistics, and possible opportunities in the bare metal cloud market to help you make an informed decision.
Here’s what we’ll cover:
- Bare metal cloud market size
- Key drivers for bare metal cloud market growth
- Factors restricting bare metal cloud market growth
- Popular use cases for bare metal cloud servers
- Top sectors for bare metal cloud infrastructure
- Top 5 cloud computing trends
- Final thoughts: Key statistics from the bare metal cloud market
Bare metal cloud market size
About 10 percent of enterprises and 9 percent of small and medium businesses (SMBs) that use private cloud technologies are currently running workloads on a bare metal cloud. And even more are experimenting with this type of server or planning to use it in the future.
The bare metal cloud market share accounted for $8.5 billion in 2023, and is projected to reach $19.1 billion by 2028, growing at an impressive compound annual growth rate of 17.4 percent.
Rapid growth in cloud technology isn’t new. For example, market research shows the revenue for public cloud service providers like Microsoft and IBM reached $544 billion USD in 2022. This figure represents a 21 percent increase over the previous year.
The services that experienced the biggest growth in this forecast period were Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS), which can include bare metal cloud.
Also, the second quarter of 2023 saw a $10 billion increase in cloud infrastructure spending, including in private cloud, compared to Q2 2022. The largest growth based on local currencies was in the Asia Pacific (APAC) region, with at least 20 percent increases in Australia, China, India, and South Korea.
A Q3 2024 market analysis shows continued momentum, up 23 percent from the third quarter of 2023, with strong growth in North America and in Europe, as well as in India and Japan.
Key drivers for bare metal cloud market growth
Market reports show that cloud computing is experiencing strong growth. The factors that are responsible for this impressive increase also affect the global bare metal cloud market segment.
Below are four of the key drivers of cloud adoption.
High-performance computing
High-performance computing (HPC) involves combining the processing power of a cluster of computers to perform advanced computational tasks. Previously, access to this kind of computing power was expensive and restricted to research facilities or large enterprises handling complex research projects.
However, cloud computing has lowered the barriers to entry, making it possible for commercial entities to use HPC for their workloads. Companies can now use cloud bare metal servers to create HPC clusters instead of building extensive on-site IT infrastructure for the same purpose.
A recent market forecast predicts a 17.6 percent compound annual growth rate (CAGR) for cloud HPC over the next five years, ending up with over $11 billion in revenue by 2026.
Reduced costs for cloud computing
One of the primary advantages that cloud computing offers over traditional data centers is cost savings.
Not all organizations can handle the capital expenditure (CapEx) for building a data center and the operating expenses (OpEx) for running one. Even small businesses that don’t require a full-scale data center may run into problems maintaining just a single dedicated server.
But the lower costs involved in getting started with a bare metal cloud server — not to mention the flexible pricing models that can adjust based on resource usage — means more IT teams can have access to this infrastructure regardless of their organization’s size.
Increasing interest in developing technologies
Modern technologies like artificial intelligence (AI), the Internet of Things (IoT), big data analytics, and language learning models (LLMs) are experiencing a lot of adoption as businesses find ways to incorporate them into their operations.
Harnessing these technologies requires the kind of processing power that cloud computing or HPC clusters can provide. As more people find new ways to apply these developing technologies and build products, like video games and apps, around them, the demand for the underlying infrastructure that powers them will also continue to rise.
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Rising demand for scalable and efficient infrastructure
Cloud bare metal servers, like Liquid Web’s cloud metal, offer a level of flexibility that can’t be matched by on-premises server infrastructure.
This ability to easily scale cloud server configurations up or down means that businesses can be more efficient with their computing workloads. The scalability of cloud computing solutions is also supported by flexible pricing models that allow customers to only pay for what they use or need.
What’s more, these servers offer single-tenant access and control, eliminating the worry of shared infrastructure being overutilized by other clients.
Factors restricting bare metal cloud market growth
While the growth forecasts paint an exciting picture for the future of the bare metal cloud market, there are also factors that can negatively impact the projected growth rate.
Here are the market’s restraint factors that you should be aware of.
Infrastructure complexity
Some of the complexity that’s associated with hosting and managing physical servers and data centers also applies to cloud bare metal servers.
This includes the initial configurations, server maintenance, software updates, managing outages and security incidents, and optimizing network connections for server clusters. The expertise required for some of these tasks may drive potential customers to explore alternatives.
Some cloud providers have recognized the impact of this complexity and come up with ways to overcome this challenge. Liquid Web, for instance, offers managed hosting solutions that handle all of the server upkeep and maintenance tasks so you can focus on your workloads.
Security challenges
The risk of cyberattacks on online infrastructure is a major source of concern for businesses. According to a 2023 report by IBM, 82 percent of data breaches involved data that was stored in the cloud. The costliest breaches occurred in the U.S., the Middle East, Canada, Germany, and Japan.
While the majority of these breaches occurred in public and multi-cloud environments, 16 percent of them involved private cloud storage.
The risk of confidential company information falling into the wrong hands may make businesses question whether moving to the cloud is the right move.
However, key players in the market are improving their security infrastructure to protect their clients. For example, Liquid Web offers security features like DDoS protection, firewalls, and automated backup solutions.
Regulatory requirements
Regulatory requirements can differ across sectors, countries, and even states, and these regulations place strict controls on things like data security and customer privacy.
Compliance with these regulations can be difficult to navigate for companies looking to take advantage of cloud infrastructure, and some may decide to forego implementation entirely rather than risk falling afoul of the law.
For example, the General Data Protection Regulation (GDPR) requires compliance even from businesses in other regions as long as they collect, process, or store data belonging to EU residents.
A U.S.-based business with its own data center can guarantee compliance with this regulation. But moving to cloud servers would require looking for a service provider that can guarantee the same level of compliance.
And EU-based businesses looking for cloud hosting services in the U.S. would also have to choose an option that is GDPR compliant.
Popular use cases for bare metal cloud servers
Many of the use cases that work for on-site dedicated servers can also apply to bare metal cloud servers. However, the efficiency and flexibility of the cloud open up new applications for dedicated servers.
Platform hosting
Dedicated cloud servers provide businesses with the infrastructure they need to develop, deploy, and host their own applications and services. As a result, you have the flexibility to host everything from multiple websites for your organization to specialized applications for your clients.
For instance, Liquid Web’s single-tenant bare metal cloud solution gives you full control over your hosting configuration so you can deliver the best performance for your applications.
Data storage and backup
Bare metal cloud servers are also perfect for database services, and you can configure them to comply with data protection and privacy regulations. The remote nature of these cloud servers makes them a perfect option for disaster recovery planning.
You can even use them as part of a hybrid cloud setup with your on-site servers, so they provide some redundancy and can keep your operations online if an outage occurs at your main site.
User-managed virtualization
For organizations that want to create and manage their own suite of virtual machines (VMs), cloud servers provide the perfect platform.
This scenario can apply to organizations with a team of developers that require preconfigured virtual instances to work with. Based on your requirements and the number of VMs you intend to run, you can instantly provision a bare metal server, install a hypervisor, and customize it for your use case.
Edge computing
Edge computing is a distributed computing model that offloads a portion of the storage and processing work to devices that are closer to the source of the data. This model is applied to modern technology trends like media streaming, AI-powered digital assistants, home automation, and cloud gaming.
All these applications rely on a powerful home server and low-latency networking services to provide a semblance of real-time interactions, and that’s what makes bare metal cloud servers perfect for edge computing.
Top sectors for bare metal cloud infrastructure
The use cases outlined in the previous section typically apply to organizations in the following market segments:
- Banking, Financial Services, and Insurance (BFSI)
- Retail
- IT and Telecommunications
- Healthcare
- Media and Entertainment
Top 5 cloud computing trends
These are the most popular trends that have risen as a result of the growing adoption rate for bare metal cloud services — and cloud computing in general.
Artificial intelligence
Artificial intelligence (AI) isn’t exactly a new piece of technology, as it has seen use in systems like search engines for a while now. However, the increased availability and affordability of cloud computing infrastructure used for LLMs has made it more accessible than ever before.
A 2022 IBM report shows that 35 percent of companies are using AI, and another 42 percent are considering using it. Common AI applications include chatbots, virtual assistants, recommendation services, and automation tools.
Today, small and midsize enterprises (SMEs) can leverage AI-based solutions from cloud service providers or build their own dedicated cloud infrastructure to process data for LLMs to replicate human behaviors.
Internet of Things
Cloud computing is also a key driving force behind the rise of Internet of Things (IoT) devices. This is an ecosystem of everyday devices like microwaves, lightbulbs, cars, and doors that use embedded sensors and software to communicate with each other and the internet.
Cloud servers store and process the data generated by these devices, allowing them to become smarter than the average home appliance. That’s why end-users can ask a smart speaker about the weather, and it will respond with the forecast for their current location.
The convenience and simplicity of these smart devices have led to their popularity, with the number of IoT devices almost doubling from 8.6 billion in 2019 to 15.1 billion in 2023.
Serverless computing
One of the more popular applications made possible by the instant provisioning and flexibility of cloud computing is serverless computing. This model of computing allows developers to create and run their applications without having to install and configure backend server infrastructure.
The cloud service provider handles all the provisioning and allocation of resources needed to run the code, so developers don’t have to worry about server management and maintenance.
So instead of paying for an entire server to run their code, and also managing its upkeep, developers only need to pay for the resources used by their application when it’s active.
Multi-cloud and hybrid cloud adoption
The variety of cloud computing options has seen companies employ different approaches to their cloud implementation strategies. A recent survey of cloud decision-makers shows that 87 percent of organizations are using some form of multi-cloud computing for their operations.
Some businesses use a combination of public and private cloud computing infrastructure to meet their operational needs. This hybrid cloud approach gives them the security and confidentiality advantages of a private cloud setup, with the affordability and accessibility of public cloud systems.
Another popular approach is using cloud computing services from different vendors, thereby taking advantage of the key features of each provider for your business needs. For example, you can use one vendor for your Software-as-a-Service (SaaS) business application and another for data storage and backups.
Cyberattacks
Affordable cloud computing coupled with readily available Internet means that more people are using online services today than ever before. Unfortunately, this also means that there is more valuable data online that malicious actors can target.
In the U.S. alone, there were 1,774 data breaches in 2022. Some of the most common attacks include phishing and ransomware. Because of this trend, implementing strong security features is paramount.
Final thoughts: Key statistics from the bare metal cloud market
Based on the current market trends, bare metal cloud servers are the future. These computing solutions offer the performance and control of traditional dedicated servers with the flexibility and scalability of cloud computing. There’s also the added advantage of flexible pricing models to ensure that you only pay for what you use.
If your business is looking to get a head start on its transition to bare metal cloud servers, take a look at what Liquid Web has to offer. Our cloud metal plans let you pick the hardware and management options that best suit your needs and include access to the best support in hosting. Or, reach out to contact us and talk to one of our experts to find the right fit for you.