Cloud data center capex is forecasted to grow double-digits, although growth among Cloud service providers look to be mixed, according to a new report from Dell’Oro Group. Meanwhile, a sharp decline in Enterprise IT spending is expected, as macroeconomic uncertainties will likely curb capital investments.
“Data center capex returned to higher growth in 1Q 2020, as some of the major Cloud service providers had reverted from capacity digestion to expansion phase,” said Baron Fung, Research Director at Dell’Oro Group. “Stay-at-home orders around the world are placing excess burdens on Cloud infrastructure, prompting some Cloud service providers to bolster capacity in critical areas of the network. However, infrastructure appropriated to advertising, which is facing headwinds this year as enterprises slash marketing budgets, will likely be curtailed,” explained Fung.
Additional highlights from the 1Q 2020 Data Center Capex Quarterly Report:
- The Top 10 Cloud service providers spent $15.4 billion, in aggregate, on data centers, a 15 percent year-over-year (Y/Y) increase.
- Worldwide Server revenue grew 1 percent Y/Y, as the Top 4 Cloud service providers expanded server capacity.
- Shipment of white box servers, which are mainly deployed by the major Cloud service providers, grew to a record 1.3 million units.
- Enterprise data center capex is projected to decline double-digits in 2020
