Cloud Infrastructure Services spends overtake Data Center spends in 2019

Worldwide spending on cloud infrastructure services is estimated to reach USD 97 billion, topping the USD 93 billion estimated spend on data center hardware and software (comprising servers, storage, networking, security and associated software). These figures, put forward by specialized research firm, Synergy Research Group (SRG), are based on the actual spends in the first three quarters and projections for Q4 (October – December) 2019.

“Annual spending on cloud infrastructure services has gone from virtually zero to almost USD 100 billion,” says SRG. Enterprise spending on data center hardware and software has been stagnant through much of the decade.

Over the whole decade, average annual spending growth for data center was 4% (mostly due to the first three years) and for cloud services was 56%. 2019 will mark the first time that enterprises spend more on cloud services (IaaS, PaaS and hosted private cloud) than they do on data center equipment.

The major segments with the highest growth rates over the decade within the data center hardware and software spend were virtualization software, Ethernet switches and network security. Server share of the total data center market remained steady while storage share declined.

In cloud infrastructure services, major segments with the highest growth rates over the decade were mainly within PaaS – especially database, IoT and analytics. IaaS share of the total held reasonably steady while managed private cloud service share declined somewhat.

“The decade has seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, pointing to an ever-growing need for data center capacity. However, over half of the servers now being sold are going into cloud providers’ data centers and not those of enterprises,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Over the last ten years we have seen a remarkable transformation in the IT market. Enterprises are now spending almost $200 billion per year on buying or accessing data center facilities, but cloud providers have become the main beneficiaries of that spending.”

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