Zoho unveils India-designed server as AI boom pushes up infra costs

Zoho Corp has unveiled an indigenously designed server platform, marking the software-as-a-service company’s entry into hardware development, as it seeks to reduce infrastructure costs, improve energy efficiency and strengthen technological self-reliance amid soaring global demand for compute resources.

The server, named Nathu La, has been designed over five years by a team based in Nagpur and is currently being deployed in Zoho's own data centres. The company said the platform delivers 12-18% lower power consumption and 20-30% lower total cost of ownership compared with conventional server deployments.

Zoho expects to manufacture between 1,000 and 2,000 Nathu La servers this year for internal deployment as part of a production validation phase. The company said it has not yet decided when, or whether, the platform will be commercially sold to external customers.

The longer-term opportunity, executives indicated, could lie in bundling hardware with software for highly sensitive deployments in government and large enterprises where data sovereignty and infrastructure control are becoming increasingly important.

The announcement comes at a time when AI workloads are reshaping global computing infrastructure and driving up demand for server-grade hardware.

"An average server that we use to run our applications costs nearly four times what it did at the start of 2026," said Ramprakash Ramamoorthy, director of AI at Zoho Corp. "AI workloads have fundamentally changed the infrastructure reality. Compute is no longer a rounding error in operating costs; it is becoming a strategic resource."

According to Ramamoorthy, the surge in AI adoption has increased demand for processors, memory and server infrastructure, forcing software companies to rethink their dependence on third-party hardware vendors and cloud providers.

The world's top three server hardware manufacturers by market revenue are Dell Technologies, Supermicro and Hewlett Packard Enterprise. These companies dominate the enterprise and AI-focused data centre markets amid high demand for accelerated computing hardware.

"Performance per watt has become strategic. You have to extract every bit of value from the compute you're using because it ultimately translates into customer value," Ramamoorthy said.

Built on Intel's Xeon 6 processor platform, the Nathu La server has been designed from the ground up by Zoho's hardware engineering team, including the motherboard, chassis, firmware and systems management software.

The company said all intellectual property associated with the platform is owned in India, while manufacturing is carried out through domestic electronics manufacturing services partners.

For Zoho, which operates its own data centres rather than relying on public cloud infrastructure, the project is part of a broader effort to control the entire technology stack, from hardware and infrastructure to software applications and AI models.

"Most software companies innovate at the surface layer," Ramamoorthy said. "We believe innovation at the foundation creates compounding value because it gives you control over costs, performance and the direction in which the technology evolves."

The server platform has been tailored to specific workloads used across Zoho's application portfolio. Different configurations have been optimised for functions such as email storage, transaction processing and real-time communications, allowing the company to eliminate unnecessary hardware components and improve energy efficiency.

The Nathu La development programme began in 2020 in Nagpur under Mangesh Sadafale, head of hardware development at Zoho.

"Today I can confidently say that all components required to design a server, from electronics and firmware to mechanical engineering, have been designed by local talent," Sadafale said. "This demonstrates that high-end hardware design capabilities can be built outside traditional technology centres."

While the Indian government has introduced policies to encourage domestic electronics manufacturing and semiconductor design, Sadafale said greater focus is needed on indigenous system design.

"We have incentives for manufacturing and semiconductor design, but system design remains a missing piece," he said. "Government support is important, but private companies also need to invest in building foundational technology capabilities."

Ramamoorthy said India needs more technology companies willing to make long-term investments in core infrastructure rather than focusing solely on software layers.

"We need many more companies willing to take these difficult, long-term bets," he said. "Building foundational know-how takes years, but that's how technological sovereignty is created."