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Cloud infrastructure revenue softens but still breaks records

Cloud infrastructure revenue softens but still breaks records

Sales declined 1.8 per cent year-over-year for the quarter

Credit: Japan National Institute of Advanced Industrial Science and Technology (AIST)

Cloud IT infrastructure revenue fell for the second consecutive quarter during the three months ending September 2019, but still outstripped revenue from non-cloud IT infrastructure, according to analysts.

Cloud IT infrastructure products – consisting of server, enterprise storage and Ethernet switches – saw sales decline to 1.8 per cent, year-over-year, for the quarter, while spending on cloud IT environments reached US$16.8 billion, according to the International Data Corporation’s (IDC) worldwide quarterly cloud IT infrastructure tracker report.

The decline was attributed mostly to public cloud spending, which fell 3.7 per cent year over year to US$11.9 billion – yet when considered sequentially, this resulted in a rise of 24.4 per cent. Regardless, public cloud spending still made up most of all cloud IT environment spending.

Meanwhile, private cloud vendor revenue growth saw stable growth, according to IDC, with a year-over-year rise for the quarter of 3.2 per cent to nearly US$5 billion.

Despite the quarterly softening, spending on cloud IT infrastructure accounted for 53.4 per cent of vendor revenues, the second time over a yearly period and the second time since IDC started tracking IT infrastructure developments.

As a result, according to IDC, spending on cloud IT infrastructure is now consistently surpassing spending on non-cloud IT infrastructure, which saw a decline of 7.7 per cent year-over-year for the quarter.

Across the Asia Pacific region (excluding Japan), cloud IT infrastructure spend increased 1.2 per cent year-over-year for the quarter. IDC analysis considers this to be low compared to the double-digit growth seen in 2018.

Dell Technologies topped the list for worldwide cloud IT infrastructure vendors in terms of quarterly revenue and market share, claiming US$2.6 billion and 15 per cent, respectively, yet saw a decline of 2.6 per cent for year-over-year in revenue. Inspur and Inspur Power Systems, as a combined entity, were the vendors that saw the largest year-over-year revenue growth, at 14.8 per cent.

Predictions

Looking past recorded data, spending is expected to continue, with IDC revising its 2019 forecast up to US$65.4 billion, resulting in little to no movement when compared to 2018 data.

Public cloud spending is predicted to reach US$44 billion for 2019, a yearly decline of 3.3 per cent, while private cloud IT infrastructure is expected to see a yearly rise of 7.2 per cent up to US$21.4 billion.

Out of the three IT infrastructure products, Ethernet switches and storage are expected to see worldwide year-over-year growth of 11.2 per cent and 0.8 per cent, while compute platform and storage spending is predicted to decline 11.2 per cent. Worldwide spending on traditional non-cloud IT infrastructure is also expected to decline 5.3 per cent.

Looking further ahead, IDC analysis predicts worldwide non-cloud IT infrastructure spending will make up only 41.9 per cent of all worldwide IT infrastructure spending by 2023.


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