Global spend on enterprise datacentre kit and private clouds down 1% in 2019

Some 37% of the world’s datacentre hardware and software spend is now being directed at kitting out public cloud server farms, according to Synergy Research Group.

The market watcher’s 2019 review of datacentre hardware and software spending trends across the globe revealed that $152bn was invested in datacentres last year, which was two percentage points more than the total spend in 2018.

A further breakdown of the data shows that in the 12 months to 31 December 2019, spending on public cloud datacentre hardware and software grew by 7%, while spending on enterprise datacentres and private cloud setups dropped by 1%.

John Dinsdale, chief analyst at Synergy Research Group, said 2019 saw a continuation of trends seen in 2018, with the amount spent on kitting out private datacentres and building private cloud environments apparently in decline.

“The market could not match the bumper growth year it had in 2018, but it still managed to nudge upwards by 2%,” he said. “This was thanks entirely to vendors seeing increased revenue from shipments to public cloud datacentres. Revenue from traditional datacentre and private cloud shipments dropped off a little from 2018.

“The public cloud datacentre share of the total market increased from 25% in 2015 to 37% in 2019, and this trend will continue.”

Synergy’s dataset includes sales of both cloud and non-cloud datacentre hardware and software products, which are bought and used by service providers and enterprises.

The research shows that servers remain the largest product category covered by its market tracker, with sales of these appliances making up nearly half of the $152bn spent on datacentre hardware and software in 2019.

And, as alluded to by Synergy in past reports, it is the original device manufacturers (ODMs) that seem to be reaping the benefits of public cloud datacentre builders upping their spend on hardware and software.

“In the public cloud segment, ODMs once again accounted for the biggest share of the market,” said Synergy in its research note. “They also benefited from a big year-end spike in shipments to hyperscale operators, thereby enjoying a record quarter.”

Dinsdale said the increase in spending on datacentre kits for use in public cloud environments should come as no surprise as enterprise demand for infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) continues to soar.

“Cloud service revenues grew by 39% in 2019, enterprise SaaS revenues grew by 26%, search/social networking revenues grew by 20%, and e-commerce revenues grew by 24%, all of which helped to drive increases in spending on public cloud infrastructure,” he said.

“Meanwhile, enterprise spending on their own datacentres is being crimped by the shift in workloads to public clouds. We are already seeing server shipments to public cloud providers outstripping shipments to enterprises, and that trend will continue.”

And these trends look set to continue this year, with a separate report by Synergy (published on 24 March 2020) highlighting the surge in use of cloud-based systems by consumers and businesses as a result of the Covid-19 coronavirus outbreak.