Growth rates show the market response to major adjustments in most sectors caused by the COVID-19 pandemic.
Spending on cloud IT infrastructure increased across most regions in 3Q20, with the highest annual growth rates in Canada (32.8 per cent), China (29.4 per cent), and Latin America (23.4 per cent). Growth in the United States was 4.7 per cent. Japan and Western Europe declined by -6.7 per cent and -3.4 per cent, respectively. In all regions except Canada and Japan, growth in public cloud infrastructure exceeded growth in private cloud IT, according to analyst and research firm, 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 per cent year over year in the third quarter of 2020 (3Q20). Investments in traditional, non-cloud, IT infrastructure declined -8.3 per cent 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 per cent year over year in 3Q20, reachingUS$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 atUS$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 per cent year over year in 3Q20 to US$5.0 billion with on-premises private clouds accounting for 63.2 per cent 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 stabilising 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 per cent growth to US$74.1 billion. IDC reduced its forecast for non-cloud infrastructure, expecting a decline of -11.4 per cent to US$60.2 billion.
Public cloud IT infrastructure is expected to grow by 16.7 per cent year over year to US$52.7 billion for the full year. Spending on private cloud infrastructure is expected to decline -0.5 per cent to US$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 per cent) of spending, growing at 2.3 per cent to US$36.4 billion while storage platforms will be the fastest growing segment with spending increasing 27.4 per cent to US$29.2 billion, and the Ethernet switch segment will grow 4.0 per cent year over year to US$8.5 billion.