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Cloud IT Infrastructure Spending Grew 12.4% in the Fourth Quarter, Bringing Total 2019 Growth into Positive Territory, According to IDCAccording to the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker, total end-user spending* on IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, recovered in the fourth quarter of 2019 (4Q19) after two consecutive quarters of decline. The 12.4% year-over-year growth in 4Q19 yielded $19.4 billion in spending. The fourth quarter results also brought the full year into positive territory with annual growth of 2.1% and total spending of $66.8 billion for 2019. Meanwhile, the overall IT infrastructure market continued to struggle after its strong performance in 2018, up 3.3% to $38.1 billion in 4Q19 but declining 1.1% to $134.4 billion for the full year. Non-cloud IT infrastructure fell 4.6% to $18.7 billion for the quarter and declined 4.1% to $67.7 billion for the year. 4Q19 Cloud IT Infrastructure Market Results In 4Q19, growth in spending on cloud IT infrastructure was driven by the public cloud segment, which grew 14.5% year over year to $13.3 billion; private cloud grew 8.2% to $6.1 billion. As the overall segment is generally trending up, it tends to be more volatile at the quarterly level as a significant part of the public cloud IT segment is represented by a few hyperscale service providers. After a weaker middle part of the year, public cloud ended 2019 barely up 0.1% to $45.2 billion. Private cloud grew in 2019 by 6.6% to $21.6 billion. As investments in cloud IT infrastructure continue to increase, with some swings up and down in the quarterly intervals, the IT infrastructure industry is approaching the point where spending on cloud IT infrastructure consistently surpasses spending on non-cloud IT infrastructure. The fourth quarter of 2019 marked the third consecutive quarter of cloud IT leadership with the annual share just slightly below the midpoint (49.7%). From here on out, IDC (News - Alert) expects cloud IT infrastructure will stay above 50% of the IT Infrastructure market at both the quarterly and annual levels, reaching 60.5% annually in 2024. Across the three IT infrastructure technology domains, storage platforms saw the fastest year-over-year growth in 4Q19 at 15.1% with spending reaching $6.6 billion. Compute platforms grew 14.5% year over year with $10.8 billion in spending while Ethernet switches declined 3.9% to $2.0 billion. For the full year 2019, Ethernet switches led with year-over-year growth of 5.0% and $8.2 billion in spending, followed by storage platforms with 1.9% growth and spending of $23.1 billion, and compute platforms with growth of 1.5% and spending of $35.5 billion.
Table Notes:
1 IDC declares a statistical tie in the worldwide cloud IT infrastructure market when there is a difference of one percent or less in the vendor revenue shares among two or more vendors.
In addition to the table above, a graphic illustrating the worldwide revenue share of the top 5 cloud IT infrastructure companies in 4Q19 and 4Q18 is available by viewing this press release on IDC.com. 4Q19 Cloud IT Infrastructure Market Forecast IDC's forecast for 2020, after taking into consideration the repercussions of the COVID-19 pandemic and its ensuing economic crisis, is for $69.2 billion in cloud IT infrastructure spending*, a 3.6% predicted annual increase over 2019. Non-cloud IT infrastructure spending is expected to decline 9.2% to $61.4 billion in 2020. Together, overall IT infrastructure spending is expected to decline 2.9% to 130.6 billion. The COVID-19 pandemic represents a severe threat to global growth. Prior to the outbreak the expected global real GDP growth was to be lackluster 2.3% (at market exchange rates) in 2020. The emergence of the epidemic in China is a game changer and the expected growth for 2020 is now -0.2%, the slowest rate since the global financial crisis. The negative effect on growth will come via both demand and supply channels. On one hand, quarantine measures, illness, and negative consumer and business sentiment will suppress demand in specific areas, while certain pockets of demand will surface, such as cloud platforms for communication and collaboration workloads. At the same time, closure of some factories and disruption to supply chains will create supply bottlenecks. IDC expects these effects to be distributed unevenly across the market landscape. "While the beginning of 2020 was marked by supply chain issues that should be resolved before the end of the second quarter, the negative economic impact will hit enterprise customers' CAPEX spending," said Kuba Stolarski, research director, Infrastructure Systems, Platforms and Technologies at IDC. "As enterprise IT budgets tighten through the year, public cloud will see an increase in demand for services. This increase will come in part from the surge of work-from-home employees using online collaboration tools, but also from workload migration to public cloud as enterprises seek ways to save money for the current year. Once the coast is clear of coronavirus, IDC expects some of this new cloud service demand to remain sticky going forward." IDC's new five-year forecast predicts cloud IT infrastructure spending* will reach $100.1 billion in 2024 with a compound annual growth rate (CAGR) of 8.4%. Non-cloud IT infrastructure spending will decline slightly to $65.3 billion with a -0.7% CAGR. Total IT infrastructure is forecast to grow at a 4.2% CAGR and produce $165.4 billion in spending in 2024. A graphic illustrating IDC's worldwide forecast for cloud IT infrastructure spending by deployment type (public cloud, private cloud, and traditional IT) is available by viewing this press release on IDC.com. * Revenue vs. Spending References IDC measures market shares by vendor revenue, which excludes channel margin. Total end user spending includes channel spending and is used in the total market sizing and forecasting described in this press release. IDC's Worldwide Quarterly Cloud IT Infrastructure Tracker is designed to provide clients with a better understanding of what portion of the server, disk storage systems, and networking hardware markets are being deployed in cloud environments. This Tracker breaks out each vendors' revenue by the hardware technology market into public and private cloud environments for historical data and provides a five-year forecast by the technology market.
Taxonomy Notes
IDC defines Compute Platforms as compute intensive servers. Storage Platforms includes storage intensive servers as well as external storage and storage expansion (JBOD) systems. Storage intensive servers are defined based on high storage media density. Servers with low storage density are defined as compute intensive systems. Storage Platforms does not include internal storage media from compute intensive servers. There is no overlap in revenue between Compute Platforms and Storage Platforms, in contrast with IDC's Server Tracker and Enterprise Storage Systems Tracker, which include overlaps in portions of revenue associated with server-based storage. For more information about IDC's Quarterly Cloud IT Infrastructure Tracker, please contact Lidice Fernandez at [email protected].
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