ICC News: According to IDC’s “Global Quarterly Enterprise Infrastructure Tracker: Buyers and Cloud Deployments,” data for the third quarter of 2023 (3Q23) indicates a year-on-year growth of 2.9% in spending on computing and storage infrastructure products for cloud deployments, including both dedicated and shared IT environments, reaching $25.4 billion. Cloud infrastructure spending continues to surpass non-cloud sectors, with the latter experiencing an 8.2% decline in 3Q23, totaling $14.9 billion. Despite a 23.9% decrease in demand for cloud infrastructure products, the average selling price (ASP) increased due to higher shipments of GPU servers to hyperscale enterprises.
Juan Pablo Seminara, Research Director of IDC’s Global Enterprise Infrastructure Tracker, stated, “Cloud infrastructure spending continues to shift towards robust configurations designed to address more complex workloads and support new artificial intelligence initiatives. Despite cautious attitudes in the face of future economic and socio-political challenges, the spending outlook for 2024 is highly optimistic, with cloud-based expenditures expected to rebound at a double-digit pace throughout the year.”
In this quarter, spending on shared (public) cloud infrastructure reached $18.5 billion, experiencing a year-on-year growth of 7.2%. In comparison to dedicated deployments and non-cloud spending, the shared cloud infrastructure category continues to capture the largest share of expenditures, constituting 45.9% of total infrastructure spending in the third quarter. The dedicated (private) cloud infrastructure sector saw a year-on-year decline of 7.2%, totaling $6.9 billion in the third quarter.
IDC predicts that by 2023, spending on cloud infrastructure will increase by 9.7% compared to 2022, reaching $100.6 billion. Non-cloud infrastructure is expected to decline by 7.7% to $58.7 billion. Spending on shared cloud infrastructure is projected to grow by 13.9% year-on-year, reaching $72.2 billion for the year, while expenditures on dedicated cloud infrastructure are expected to remain unchanged in 2023, with a marginal increase of 0.3%, totaling $28.3 billion. The slow growth forecast for non-cloud infrastructure reflects the headwinds the market faces, while cloud spending remains robust due to new and existing critical workloads that often require higher-end, performance-oriented systems.
IDC’s service provider category includes cloud service providers, digital service providers, communication service providers, hyperscalers, and hosting service providers. In the third quarter of 2023, overall spending by service providers on computing and storage infrastructure was $24.9 billion, experiencing a year-on-year growth of 1.7%. This spending represents 61.7% of the entire market. Expenditures by non-service providers (such as enterprises, government, etc.) decreased to $15.4 billion, a year-on-year decline of 6.3%. IDC anticipates that by 2023, service providers’ spending on computing and storage will reach $98.5 billion, showing a year-on-year growth of 8.3%.
From a geographical perspective, the third quarter of 2023 brought a mixed picture in year-on-year cloud infrastructure spending across various regions. Canada, Central and Eastern Europe (affected by the Russia-Ukraine conflict), Western Europe (impacted by high energy prices and a tightening macroeconomic environment), the Middle East and Africa (MEA), and Latin America all experienced negative growth. Cloud infrastructure spending in Canada declined by 26.7%; Central and Eastern Europe decreased by 20.8%; Western Europe saw a decline of 15.4%; the Middle East and Africa dropped by 2.0%; and Latin America decreased by 0.7%. In contrast, regions experiencing increased spending in the third quarter of 2023 were Japan, China, the Asia-Pacific region (excluding Japan and China), and the United States. Cloud spending in these regions grew by 16.0%, 15.5%, 10.0%, and 0.9% year-on-year, respectively.
IDC predicts that in the long term, global cloud infrastructure spending will grow at a compound annual growth rate (CAGR) of 10.6% during the 2022-2027 forecast period, reaching $152 billion by 2027, accounting for 10% of the computing and storage base 68.8% of total facility expenditures. By 2027, shared cloud infrastructure spending will account for 70.5% of total cloud spending, with a compound annual growth rate of 11.1%, reaching $107.1 billion. Spending on dedicated cloud infrastructure will grow at a compound annual growth rate of 9.7% to $44.9 billion. Spending on non-cloud infrastructure will remain relatively flat, growing at a CAGR of 1.6%, reaching $68.9 billion by 2027. Service provider spending on computing and storage infrastructure is expected to grow at a compound annual growth rate of 10.4%, reaching $148.9 billion by 2027.
