Hyperscale Environments Driving Cloud IT Infrastructure Market

Public cloud providers like Amazon, Google and Microsoft will account for 62.5 percent of IT infrastructure spending this year, IDC says.

Cloud Infrastructure

Hyperscale service providers will drive growth in spending in the global cloud IT infrastructure market this year, which is expected to show an increase of 16.2 percent from 2015, according to analysts with market research firm IDC.

In a report this month, analysts said spending on IT infrastructure—including servers, enterprise storage products and Ethernet switches—for cloud deployments will hit $37.4 billion in 2016, with public cloud data centers by service providers like Amazon Web Services, Google and Microsoft accounting for 62.5 percent of the money spent.

Overall spending on IT infrastructure for off-premises cloud environments—both public and private—will reach $28.4 billion, while the money spent on enterprise IT infrastructure technologies that are deployed in traditional, non-cloud environments will fall 1.8 percent year-over-year. However, they will still account for the largest share—63.1 percent—of end user spending.

"Cloud is one of the major options considered by end users as they think about optimization of their IT operations and utilization of on-site and off-site resources," Natalya Yezhkova, research director for IDC's Storage Systems unit, said in a statement. "This demand for cloud services will continue to drive the underlying shift in IT infrastructure spending from on-premises to off-premises deployments. As public cloud data centers represent the major segment of off-premises IT infrastructure deployments, overall spending done by this segment is closely tied to spending by public cloud service providers, in particular, hyperscale SPs."

IDC's numbers mirror similar trends found by other research firms. Synergy Research Group analysts in September reported that for the last nine quarters, total spending on data center infrastructure—which includes servers, operating systems, storage and networking gear, network security and virtualization software—has averaged about $29 billion, and increasingly is being driven by cloud deployments.

"While total spending on data center infrastructure remains relatively flat, cloud share of that spending continues to rise as an ever-increasing portion of computer workloads migrate to either public or private clouds," Jeremy Duke, founder and chief analyst at Synergy Research Group, said in a statement. "We are also seeing that within the cloud infrastructure market, hyperscale cloud operators are accounting for an ever-larger share of overall [capital expenditure]. This is a trend which is not going to change any time soon."

According to Synergy, Hewlett Packard Enterprise, Cisco Systems and Microsoft were the top vendors in the three primary segments—private cloud hardware, public cloud hardware and cloud infrastructure software—but a combined Dell-EMC would have come in second in private cloud and third in public cloud hardware.

According to IDC analysts, spending on IT infrastructure for off-premises and on-premises clouds will show double-digit growth across all regions, while spending on on-premises, non-cloud IT will fall in all but one region.

Looking down the road, they said spending on cloud IT infrastructure over the next five years will grow 13.6 percent a year, to $60.8 billion by 2020, accounting for 49.7 percent of the total spending on enterprise IT infrastructure. Public clouds will make up 77.6 percent of the total spend by 2020, and spending will grow 15 percent a year. Spending on non-cloud IT will fall 1.8 percent a year.