IDC expects public cloud IT infrastructure spending to surpass non-cloud IT infrastructure spending again in the near future and expand its lead going forward...
According to the International Data Corporation (IDC), vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, increased 9.4% year over year in the third quarter of 2020 (3Q20). Investments in traditional, non-cloud, IT infrastructure declined -8.3% year over year in 3Q20.
These growth rates show the market response to major adjustments in business, educational, and societal activities caused by the COVID-19 pandemic and the role IT infrastructure plays in these adjustments. 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. Cloud environments, and particularly public cloud, were a key enabler of this shift.
Spending on public cloud IT infrastructure increased 13.1% year over year in 3Q20, reaching $13.3 billion. During the previous quarter spending on public cloud IT infrastructure exceeded non-cloud IT infrastructure spending for the first time ever, but non-cloud IT infrastructure spending was back on top in 3Q20 at $13.7 billion. IDC expects public cloud IT infrastructure spending to surpass non-cloud IT infrastructure spending again in the near future and expand its lead going forward. Spending on private cloud infrastructure increased 0.6% year over year in 3Q20 to $5.0 billion with on-premises private clouds accounting for 63.2% of this amount.
IDC believes the hardware infrastructure market has reached a tipping point and cloud environments will continue to account for an increasingly greater share of overall spending. With only one quarter remaining and the market stabilizing after the initial COVID-19 market shock, IDC has increased its forecast slightly for cloud IT infrastructure spending for the full year 2020, expecting 11.1% growth to $74.1 billion. IDC reduced its forecast for non-cloud infrastructure, expecting a decline of -11.4% to $60.2 billion. Public cloud IT infrastructure is expected to grow by 16.7% year over year to $52.7 billion for the full year. Spending on private cloud infrastructure is expected to decline -0.5% to $21.3 billion for the full year.
As of 2019, the dominance of cloud IT environments over non-cloud already existed for compute platforms and Ethernet switches while the majority of newly shipped storage platforms were still residing in non-cloud environments. Starting in 2020, with increased investments from public cloud providers on storage platforms, this shift will remain persistent across all three technology domains. Within cloud deployment environments in 2020, compute platforms will remain the largest segment (49.1%) of spending, growing at 2.3% to $36.4 billion while storage platforms will be the fastest growing segment with spending increasing 27.4% to $29.2 billion, and the Ethernet switch segment will grow 4.0% year over year to $8.5 billion.
Spending on cloud IT infrastructure increased across most regions in 3Q20, with the highest annual growth rates in Canada (32.8%), China (29.4%), and Latin America (23.4%). Growth in the United States was 4.7%. Japan and Western Europe declined by -6.7% and -3.4%, respectively. In all regions except Canada and Japan, growth in public cloud infrastructure exceeded growth in private cloud IT.
At the vendor level, the results were mixed. Inspur, Huawei, and Lenovo had double-digit year-over-year growth while most other major vendors, including the ODM Direct group of vendors, had single-digit growth. Cisco was the only major vendor with a year-over-year decline.
|Top Companies, Worldwide Cloud IT Infrastructure Vendor Revenue, Market Share, and Year-Over-Year Growth, Q3 2020 (Revenues are in Millions)|
|Company||3Q20 Revenue (US$M)||3Q20 Market Share||3Q19 Revenue (US$M)||3Q19 Market Share||3Q20/3Q19 Revenue Growth|
|1. Dell Technologies||$2,745||15.0%||$2,592||15.5%||5.9%|
|2. HPE/New H3C Group a||$1,962||10.7%||$1,878||11.2%||4.5%|
|3. Inspur/Inspur Power Systems b||$1,587||8.7%||$1,215||7.2%||30.7%|
|IDC’s Quarterly Cloud IT Infrastructure Tracker, Q3 2020|
* IDC declares a statistical tie in the worldwide cloud IT infrastructure market when there is a difference of one percent or less in the vendor revenue shares among two or more vendors.
a Due to the existing joint venture between HPE and the New H3C Group, IDC reports external market share on a global level for HPE as “HPE/New H3C Group” starting from Q2 2016 and going forward.
b Due to the existing joint venture between IBM and Inspur, IDC reports external market share on a global level for Inspur and Inspur Power Systems as “Inspur/Inspur Power Systems” starting from 3Q 2018.
Long-term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 10.6%, reaching $110.5 billion in 2024 and accounting for 64.0% of total IT infrastructure spend. Public cloud datacenters will account for 69.9% of this amount, growing at a 11.3% CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.2%. Spending on non-cloud IT infrastructure will rebound after 2020 but will decline overall at a CAGR of -1.7%.