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Worldwide Cloud IT Infrastructure Revenue Sees Immense Growth

Industry News from Cloud IT

Worldwide Cloud IT Infrastructure Revenue Sees Immense Growth

July 20, 2016
By Alicia Young
Web Editor

According to the IDC (News - Alert) Worldwide Quarterly Cloud IT Infrastructure Tracker, vendor revenue from sales of infrastructure products (server, storage and Ethernet switch) for cloud IT grew by 3.9 percent each year to $6.6 billion in the first quarter of 2016 on slowed demand from the hyperscale public cloud sector. This growth includes both the public and private cloud.

Continuing this trend of growth, total cloud IT infrastructure revenues rose to a 32.3 percent share of overall IT revenues in the first quarter of 2016. This is up from 30.2 percent a year ago. Meanwhile, revenue from infrastructure sales to private cloud grew by 6.8 percent to $2.8 billion. Public cloud experienced a 1.9 percent increase to $3.9 billion. On the downward swing, revenue in the traditional IT infrastructure segment decreased by 6 percent year over year in the first quarter, involving declines in storage and servers, and growth in Ethernet switch. Speaking of Ethernet switch, it displayed strong year to year growth in the private and public clouds, boasting 53.7 percent and 69.4 percent respectively. Storage grew 11.5 percent yearly in private cloud, but declined 29.6 percent in public cloud. On the other hand, server declined 1.1 percent in private cloud and grew 8.7 percent in public cloud.

Kuba Stolarski, research director for Computing Platforms at IDC, commented on the reasons behind these trends: “A slowdown in hyperscale public cloud infrastructure deployment demand negatively impacted growth in both public cloud and cloud IT overall.” He continued to say, “Private cloud deployment growth also slowed, as 2016 began with difficult comparisons to 1Q15, when server and storage refresh drove a high level of spend and high growth. As the system refresh has mostly ended, this will continue to push private cloud and, more generally, enterprise IT growth downwards in the near term.”

Stolarski continued to estimate future trends by saying, “Hyperscale demand should return to higher deployment levels later this year, bolstered by service providers who have announced new datacenter builds expected to go online this year. As the market continues to work through this short term adjustment period, with geopolitical wild cards such as Brexit looming, end-customers' decisions about where and how to deploy IT resources may be impacted. If new data sovereignty concerns arise, service providers will experience added pressure to increase local datacenter presence, or face potential loss of certain customers' workloads.”

Edited by Stefania Viscusi

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