Virtual stagnation in the market for enterprise-owned data centre equipment.
Enterprise spending on cloud infrastructure services continued to ramp up aggressively in 2020, growing by 35 per cent to reach almost US$130 billion. Meanwhile enterprise spending on data centre hardware and software dropped by 6 per cent to under US$90 billion.
This continued a decade-long trend of explosive growth in cloud and virtual stagnation in the market for enterprise-owned data centre equipment. In 2019 the two markets were almost equal in size but in 2020 COVID-19 helped to further fuel this major shift in worldwide IT operations.
Over the decade, average annual spending growth for data centre was just 2 per cent and for cloud services (IaaS, PaaS and hosted private cloud) was 52 per cent.
In 2020 worldwide spending on enterprise data centre hardware and software (comprising servers, storage, networking, security and associated software) was US$89 billion. The major segments with the highest growth rates over the decade were virtualization software, Ethernet switches and network security.
Server share of the total data centre market remained steady while storage share declined. Within the US$130 billion cloud infrastructure services market, the major segments with the highest growth rates over the decade were mainly within PaaS – especially database, IoT and analytics. IaaS share of the total held reasonably steady while managed private cloud service share declined somewhat.
“Over the last ten years we have seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, resulting in an ever-growing need for data centre capacity. However, 60 per cent of the servers now being sold are going into cloud providers’ data centres and not those of enterprises,” said John Dinsdale a chief analyst at Synergy Research Group.
He noted when a company needs computing power to manage its data and to run its business apps, it can either invest in its own data centre infrastructure or it can use cloud services provided by a public cloud provider.
“Clearly companies have been voting with their wallets on what makes the most sense for them. We do not expect to see such a drastic reduction in spending on enterprise data centres over the next five years, but for sure we will continue to see aggressive cloud growth over that period,” he said.