The market will face significant macroeconomic headwinds and curbed demand
According to the International Data Corporation Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 16.3 per cent year over year in the fourth quarter of 2022 (4Q22) to $US24.1 billion. Spending on cloud infrastructure continues to outgrow the non-cloud segment although the latter had strong growth in 4Q22 as well, increasing 9.4 per cent year over year to $US18.7 billion. For the full year, cloud infrastructure grew 19.4 per cent to $US87.7 billion, while non-cloud grew 13.6 per cent to $US66.7 billion. The market continues to benefit from high demand, large backlogs, rising prices, and an improving infrastructure supply chain.
Spending on shared cloud infrastructure reached $US16.8 billion in the quarter, increasing 18.5 per cent compared to a year ago. For the full year in 2022, spending on shared cloud infrastructure totalled $US61.5 billion, growing 20.1 per cent year over year. IDC expects to see continuous strong demand for shared cloud infrastructure, which is expected to surpass non-cloud infrastructure in spending in 2023. The dedicated cloud infrastructure segment grew 11.5 per cent year over year in 4Q22 to $US7.2 billion, and 18.0 per cent in 2022 to $US26.2 billion. Of the total dedicated cloud infrastructure, 45.5 per cent was deployed on customer premises during the quarter, and 45.2 per cent for the full year.
For 2023, IDC is forecasting cloud infrastructure spending to grow 6.9 per cent compared to 2022 to $US93.7 billion – a significant decrease from the 19.4 per cent annual growth in 2022. Non-cloud infrastructure is expected to decline 10.3 per cent to $US59.8 billion. Shared cloud infrastructure is expected to grow 7.5 per cent year over year to $US66.1 billion for the full year, while spending on dedicated cloud infrastructure is expected to grow 5.4 per cent to $US27.6 billion for the full year. The subdued growth forecast reflects the expectation that the market will face significant macroeconomic headwinds and curbed demand, with cloud staying positive due to the drive for modernization, opex focus, and continued growth in digital consumer services demand, while non-cloud spending contracts as enterprise customers shift towards capital preservation.
IDC tracks various categories of service providers and how much compute and storage infrastructure these service providers purchase, including both cloud and non-cloud infrastructure. The service provider category includes cloud service providers, digital service providers, communications service providers, and managed service providers. In 4Q22, service providers as a group spent $US24.1 billion on compute and storage infrastructure, up 16.0 per cent from the prior year. This spending accounted for 56.3 per cent of the total market. Non-service providers (e.g., enterprises, government, etc.) increased their spending at a lower rate, 9.7 per cent year over year. For 2022, service providers spent $US87.9 billion, up 18.0 per cent year over year, and accounting for 56.9 per cent of total compute and storage spending for the year. Meanwhile, non-service providers grew 15.4 per cent to $US66.4 billion. IDC expects compute and storage spending by service providers to reach $US92.3 billion in 2023, growing at 5.1 per cent year over year.
On a geographic basis, year-over-year spending on cloud infrastructure in 4Q22 increased in all regions except Central & Eastern Europe (CEE), which is impacted by the Russia-Ukraine war. Spending in CEE declined 54.0 per cent year over year. Latin America, Middle East & Africa (MEA), Western Europe, and USA grew the most at 38.6 per cent, 38.0 per cent, 25.5 per cent, and 21.8 per cent year over year, respectively. All other regions demonstrated growth in the teens and single digit percentages. For 2022, CEE declined 39.7 per cent, MEA grew the most at 41.0 per cent, and all other regions grew in the 10-30 per cent range. For 2023, cloud infrastructure spending is expected to grow in all regions except CEE and MEA, with China (PRC) expected to grow 19.8 per cent. All other regions (Asia/Pacific (excluding Japan and China), Canada, Japan, Latin America, USA, and Western Europe) are expected to post annual growth in the 0-10 per cent range.
Long term, IDC predicts spending on cloud infrastructure to have a compound annual growth rate (CAGR) of 10.5 per cent over the 2022-2027 forecast period, reaching $US144.3 billion in 2027 and accounting for 67.6 per cent of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 71.7 per cent of the total cloud amount, growing at a 11.0 per cent CAGR and reaching $US103.5 billion in 2027. Spending on dedicated cloud infrastructure will grow at a CAGR of 9.3 per cent to $US40.7 billion. Spending on non-cloud infrastructure will grow at a CAGR of 0.7 per cent, reaching $US69.0 billion in 2027. Spending by service providers on compute and storage infrastructure is expected to grow at a 10.0 per cent CAGR, reaching $US141.3 billion in 2027.
IDC’s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment is designed to provide clients with a better understanding of what portion of the compute and storage hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors’ revenue into shared and dedicated cloud environments for historical data and provides a five-year forecast. This Tracker is part of the Worldwide Quarterly Enterprise Infrastructure Tracker, which provides a holistic total addressable market view of the four key enabling infrastructure technologies for the datacentre (servers, external enterprise storage systems, and purpose-built appliances: HCI and PBBA).
Tags: Cloud ComputingIDC
