COVID-19 spurs record data centre spending

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COVID-19 spurs record data centre spending

The global COVID-19 pandemic has spurred massive spending increases on data centres from the world’s largest data centre operators—led by Amazon, Google, Facebook and Microsoft—which spent a record US$37 billion in the third quarter of 2020.

“The hyperscale companies are once again breaking all records for their level of spending, spurred on by business models that have actually benefited from the pandemic,” said John Dinsdale, a chief analyst at market research firm Synergy Research Group, in an email to CRN.

The global COVID-19 pandemic has yet to slow down Capex spending from the largest cloud players, which continue to spend billions each quarter on data centres as demand for cloud services has spiked since the start of the pandemic in early 2020. Over 80 percent of revenue generated by the 20 leading hyperscale data centre operators came via cloud, digital services and online activity sales—all of which have seen COVID-19-related boosts, according to Synergy.

“As expected, the hyperscale operators are having little difficulty weathering the pandemic storm,” said Dinsdale. “Their revenues and Capex have both grown by strong double-digit amounts this year and this has flowed down to strong growth in spending on data centres, up 18 percent from 2019.”

Amazon, Facebook, Google and Microsoft continue to lead the way in terms of Capex spending on data centres, followed by Apple, Alibaba and Tencent. The majority of the US$37 billion spent in the third quarter of 2020 went toward building, expanding and equipping massive data centres.

Synergy analyzes the Capex and data centre footprint of the world’s 20 biggest cloud and internet service firms. In aggregate, the 20 companies generated US$1.1 trillion in revenue during the first three quarters of 2020, up 15 percent year over year.

“As these companies go from strength to strength, they need an ever-larger footprint of data centres to support their rapidly expanding digital activities. This is good news for companies in the data centre ecosystem who can ride along in the slipstream of the hyperscale operators,” said Dinsdale.

Modern hyperscale data centres house tens of thousands of servers and other critical IT products such as storage, networking and power systems. As of the third quarter of 2020, the number of hyperscale data centres across the globe reached 573.

Total Capex spending on data centres by these 20 market-leading hyperscale companies jumped to nearly US$100 billion in the first three quarters of 2020, representing an increase of 16 percent year over year.

“While the hyperscale operators have seen a COVID-19 boost to business this year, the longer-term trend remains one of strong, steady growth, from which many companies in the data centre ecosystem will benefit,” said Dinsdale.

This article originally appeared at crn.com

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