Public cloud prompts data center spending boost

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Public cloud prompts data center spending boost

Global spending on datacentre hardware and software increased again in 2019 thanks to investments made by public cloud providers.

Enterprises, managed services providers and public clouds shelled out a total of US$152 billion last year on building out their datacentres. That represented a 2 percent uptick from the previous year—a far cry from 2018, which saw an 18 percent surge in spending in what was an unusually lucrative year for that market.

“The market could not match the bumper growth year that it had in 2018, but it still managed to nudge upwards by 2 percent,” said John Dinsdale, Synergy’s chief analyst.

But 2018 was an outlier for several reasons, Dinsdale said. Not only did unit volumes increase, but the market was powered by richer server configurations and higher component costs.

The year that recently ended continued the trend of public clouds becoming more-important drivers of revenue to technology suppliers, especially ODM vendors—public cloud spending ramped by 7 percent in 2019, while investments in traditional datacentres declined by one percent.

Those public cloud providers now fuel 37 percent of the larger market, compared to 25 percent back in 2015, according to Synergy.

Servers were the largest product segment in that mix, accounting for 46 percent of the 2019 spend. Other technologies that pushed the market above US$150 billion included operating systems, storage, networking, virtualization software, network security and management software.

As to vendors, based on Q4 revenue, Dell, Microsoft, HPE and Cisco led the field, followed by Huawei, IBM, VMware, Inspur and Lenovo.

Public cloud providers were able to continue ramping spend on those companies’ products because they were seeing whopping 39 percent growth in the cloud services they offered their own customers.

“Meanwhile, enterprise spending on their own datacentres is being crimped by the shift in workloads to public clouds,” Dinsdale said. “We are already seeing server shipments to public cloud providers outstripping shipments to enterprises and that trend will continue.”

This article originally appeared at crn.com

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