Global hardware infrastructure market reaches ‘tipping point’ towards cloud

IT infrastructure has reached a tipping point, with global spending on cloud environments expected to account for a greater share of spending than non-cloud environments.  

This is according to research firm IDC’s Worldwide Quarterly Cloud IT Infrastructure Tracker, which claimed that revenue from sales of IT infrastructure products — servers, enterprise storage, and Ethernet switches — for cloud environments rose by 9.4 per cent during the third quarter of 2020. 

Meanwhile, investment in traditional non-cloud IT infrastructure was down by 8.3 per cent during the same period. 

In fact, the research firm said current trends indicate that the hardware infrastructure market has reached a “tipping point”, with cloud environments anticipated to continue to account for an increasingly greater share of overall spending. 

IDC claimed the growth showed just how important the role of IT infrastructure was during the disruption caused by the coronavirus pandemic. 

“Across the world, there were massive shifts to online tools in all aspects of human life, including collaboration, virtual business events, entertainment, shopping, telemedicine, and education," the research firm noted. “Cloud environments, and particularly public cloud, were a key enabler of this shift.” 

Dell Technologies was the top vendor in the quarter in terms of total revenue and market share, which was US$2.7 billion and 15 per cent, respectively. Meanwhile, Huawei recorded the strongest growth at 44.4 per cent, year-on-year, to US$910 million. 

Of the top vendors, Cisco was the only one to record a loss in revenue, declining 6 per cent, to US$1 billion. 

Spending on public cloud infrastructure increased in the quarter by 13.1 per cent, year-over-year, to US$13.3 billion. This was surpassed by non-cloud infrastructure spending, at US$13.7 billion. 

While public cloud spending lost the lead it had on non-cloud spending from the previous quarter, which the firm claimed was for the first time ever, IDC expects public cloud spending to surpass it again in the near future. 

Meanwhile, spending on private cloud infrastructure rose by 0.6 per cent, year-over-year, for the period, to US$5 billion. This was mostly driven by on-premises private clouds, which account for 63.2 per cent of the total figure. 

As a result of the growth, IDC increased its forecast for cloud IT infrastructure spending for 2020 and is now expecting growth in the market segment of 11.1 per cent, year-over-year, to US$74.1 billion. Additionally, public cloud infrastructure is forecast to grow by 16.7 per cent, year-over-year, to US$52.7 billion. 

Not so fortunate are the forecasts for private cloud infrastructure, which is expected to decline by 0.5 per cent for the year, to US$21.3 billion, and non-cloud infrastructure, now forecast to drop by 11.4 per cent, to US$60.2 billion. 

At the component level, compute platforms are anticipated to hold onto their market dominance within deployed environments, with estimated growth of 2.3 per cent to US $36.4 billion. This is then followed by storage platforms’ expected growth of 27.4 per cent, to US$29.2 billion, and then Ethernet switches' forecast growth of 4 per cent, to US$8.5 billion. 

Looking past 2020, IDC anticipates a five-year compound annual growth rate (CAGR) for cloud IT infrastructure of 10.6 per cent, hitting US$110.5 billion in 2024 to consist of 64 per cent of total IT infrastructure spend.

Meanwhile, spending on non-cloud IT infrastructure is forecast to see a rebound after 2020, but ultimately will decline at an overall CAGR of 1.7 per cent.