As businesses surge into the cloud, spending on hardware for public-cloud infrastructure is plunging even as it’s rising for private clouds, says a new report from IDC.
2020 will mark the first year that infrastructure spending for cloud will exceed that for traditional IT, says IDC.
I’ll toss a handful of numbers at you in a moment. But first: the upshot is that companies are continuing to get out of the data-center business, as global IaaS leaders Amazon, Microsoft and Google prove to be much better choices for investing in cloud infrastructure.
The IDC report, which strives mightily to offer piles of statistics but little or no business context, did yield these three important findings:
- In Q2 ended June 30, sales of infrastructure products to public-cloud environments were down 15.2% year over year to $9.4 billion. For calendar 2019, IDC predicts such spending will fall 6.7% to $42 billion.
- In the same period, sales of infrastructure products for private-cloud environments were up 1.5% year over year to $4.6 billion. For all of 2019, IDC predicts, spending on this segment will rise 8.4%.
- For the full year, 2019 will be the last waltz for traditional IT as the primary target for infrastructure spending. In 2020, IDC says, infrastructure spending on cloud IT will overtake that for traditional IT, and it will hold the lead for good.
A “Crossing Point” for Cloud Technology
On the ascension of infrastructure spending for the cloud over that for traditional IT, IDC offered this perspective:
Overall, the IT infrastructure industry is at crossing point in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50% mark for the first time but fell below this important tipping point since then… Longer-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.
In the public-cloud segment, what caused that nontrivial decline in hardware spending for cloud infrastructure? Are businesses cooling on the cloud?
Or are they realizing that investing heavily in data-centers and their massive IT requirements is a lousy option in contrast to letting the hyperscalers do all that heavy—and expensive—lifting?
Here’s IDC’s take:
“This segment of the market continues to be highly impacted by demand from a handful of hyperscale service providers, whose spending on IT infrastructure tends to have visible up and down swings.”
Yes, “highly impacted” indeed.
But even as the spending on hardware by Amazon, Microsoft and Google “tends to have visible up and down swings,” their cloud businesses are absolutely booming, and their IaaS segments are a big part of that growth.
(Disclosure: at the time of this writing, Microsoft and Google Cloud were clients of Evans Strategic Communications LLC and/or Cloud Wars Media LLC.)
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