Cloud data center CAPEX is forecasted for higher growth despite market challenges, according to a recently published report from Dell’Oro Group. The trend is driven by Tier 1 Cloud service providers resuming spending on servers following a pause in 2019.
“Despite recent market uncertainties, we anticipate the Tier 1 Cloud service providers to increase data center capex as planned, primarily on servers, as the sector seeks to resume capacity expansion,” said Baron Fung, Research Director at Dell’Oro Group. “We project a steep decline in enterprise IT spending due to severe near-term supply and demand disruptions from COVID-19. Enterprises will seek to conserve capital during these uncertain times and resort to the Cloud to satisfy near-term demand for digital services. We expect that the Cloud service providers will need to expand their infrastructure at a measured pace to capture this incremental demand,” explained Fung.
Following are additional highlights from the 4Q 2019 Cloud Data Center Capex Quarterly Report:
- The Top 10 Cloud service providers spent $66 billion, in aggregate in 2019, a 3 percent annual increase.
- Amazon Web Services maintained a 50 percent Cloud revenue share in 2019, although Microsoft Azure and Google Cloud Platform gained share.
- Spending on servers projected to compose of 47 percent of data center capex in 2020.
