According to a recently published report from Dell’Oro Group, Cloud data center capex is forecasted to be higher this year despite challenges caused by the COVID-19 pandemic.
“We project a steep decline in enterprise IT spending [1] due to severe near-term supply and demand disruptions from COVID-19. Enterprises will seek to conserve capital during these uncertain times and resort to the Cloud to satisfy near-term demand for digital services. We expect that the Cloud service providers will need to expand their infrastructure at a measured pace to capture this incremental demand,” said Baron Fung, Research Director at Dell’Oro Group.
The Tier 1 Cloud service providers are due to resume spending on servers following a pause in 2019. “Despite recent market uncertainties, we anticipate the Tier 1 Cloud service providers to increase data center capex as planned, primarily on servers, as the sector seeks to resume capacity expansion,” Fung added.
Dell’Oro calculated that the top ten cloud service providers [2], in aggregate, spent US$66 billion on data center infrastructure during 2019, which was a 3% annual increase. Amazon Web Services (AWS) maintained a 50% cloud revenue share during the year, while Microsoft Azure and Google Cloud Platform increased their respective cloud services market-shares.
Note 2. In a February 4, 2020 report, Canalsys said that Cloud infrastructure services spending was up 37% in Q4 2019 to top US$107 billion for the full year. The worldwide cloud infrastructure services market reached a record high in Q4 2019, as spending grew 37% to over US$30 billion. The market research firm reported that AWS, Microsoft Azure, Google Cloud and Alibaba Cloud were the top four cloud service providers.
………………………………………………………………………………………………………………………………….
Following are additional highlights from the 4Q 2019 Cloud Data Center Capex Quarterly Report:
- The Top 10 Cloud service providers spent $66 billion, in aggregate in 2019, a 3 percent annual increase.
- Amazon Web Services (AWS) maintained a 50 percent Cloud revenue share in 2019, although Microsoft Azure and Google Cloud Platform gained market share.
- Spending on servers is projected to compose of 47 percent of data center capex in 2020.
Dell’Oro Group’s Cloud Data Center Capex Quarterly Report details the capital spending of each of the ten largest Cloud service providers. Data is provided on facilities and servers by geographic region and availability zone as well as on the number of installed servers. The report also discusses market trends, drivers of the leading Cloud service providers’ capex growth during the quarter, and the outlook for the next year.
References:
https://www.idc.com/getdoc.jsp?containerId=prUS46171120
https://www.canalys.com/newsroom/canalys-worldwide-cloud-infrastructure-Q4-2019-and-full-year-2019
Leave a Reply