Spending on IT infrastructure for public and private cloud environments will grow steadily over the next several years as revenue for traditional data center infrastructures erodes, according to analysts with IDC.
This year alone, total spending on systems—servers, storage appliances and Ethernet switches—for cloud infrastructures will jump 18.9 percent over 2015, hitting $38.2 billion. In traditional data centers, spending on IT infrastructure will drop by 4 percent. In addition, between now and 2020, the percentage of IT infrastructure spending that goes to cloud environments also will increase. This year, traditional IT infrastructure spending will account for 62.8 percent of all spending.
However, spending on cloud infrastructure will grow at 12.5 percent a year between 2015 and 2020, reaching $57.8 billion in that last year and accounting for 47.9 percent of total IT infrastructure spending. Spending on non-cloud infrastructure will fall 1.3 percent a year.
"For the majority of corporate and public organizations, IT is not a core business but rather an enabler for their core businesses and operations," Natalya Yezhkova, research director for storage systems at IDC, said in a statement."Expansion of cloud offerings creates new opportunities for these businesses to focus efforts on core competences while leveraging the flexibility of service-based IT."
The market research firm is putting a lot of effort behind analyzing the cloud IT infrastructure space. The newest numbers April 11 came a week after IDC analysts announced that in 2015, sales of cloud IT infrastructure products jumped 21.9 percent over the previous year, to $29 billion. Cloud-related sales grew to account for 32.2 percent of all IT infrastructure revenue, up from 28.6 percent in 2014.
The report also gave an indication of what Dell's $67 billion acquisition of data storage giant EMC and its various federated companies—such as VMware, VCE, Pivotal and RSA—will mean for the industry. Hewlett Packard Enterprise (HPE) in 2015 was the top cloud IT infrastructure vendor, with 15.7 percent of the market and more than $4.5 billion in revenue. Dell was second with 10.6 percent of the market and more than $3 billion in revenue, while EMC's market share was 7.6 percent and revenue was more than $2.2 billion. (EMC was the fourth-largest vendor; Cisco Systems was No. 3.)
Dell executives expect the EMC deal to close between May and October. When it does, the combined company's market share and revenues could exceed those of HPE. Dell is making the bid for EMC to help accelerate its transformation from a PC maker to a more complete enterprise IT solutions and services provider, and the cloud IT infrastructure numbers suggest that the deal will help in that market.
IDC analysts said the market numbers indicate the growing acceptance of public clouds by businesses—public cloud adoption is among the fastest growing parts of the space—and the growing demand for hybrid environments in enterprises.
"End customers are modernizing their infrastructures along specific workload, performance, and TCO requirements," Kuba Stolarski, research director for computing platforms at IDC, said in a statement. "Options on and off premises continue to expand, along with open platforms that enhance hybrid capabilities for a variety of use cases. Public cloud as-a-service offerings also continue to mature and grow in number, allowing customers to increasingly use sophisticated, mixed strategies for their deployment profiles."
Stolarski said that "while the ice was broken a long time ago for public cloud services, the continued evolution of the enterprise IT customer means that public cloud acceptance and adoption will continue on a steady pace into the next decade."
The analysts expect the demand for public cloud infrastructure spending will continue to outpace other spending through 2020. This year, they said that spending on public cloud infrastructures will jump 14.1 percent, to $24.4 billion. Regarding private cloud infrastructure spending—aimed primarily toward on-premises deployments—the numbers will reach $13.9 billion, an 11.1 percent increase.
Longer term, spending on public cloud infrastructures will grow 13.8 percent through 2020, while private cloud infrastructure revenue will increase 10.2 percent during that time. In 2020, service providers will spend $37.5 billion on IT infrastructure for providing public cloud services, while spending on private cloud IT will reach $20.3 billion.