Cloud Infrastructure Hardware (Global Market)

The main articles are:

• Cloud Computing (Global Market)
• Cloud Infrastructure Services (Global)
• Cloud System Management (CSM) software

2023: Annual sales of cloud IT hardware in the world exceeded $100 billion for the first time

At the end of 2023, the volume of the global cloud infrastructure market for the first time exceeded $100 billion, reaching $100.6 billion. This is 9.7% more compared to 2022, as stated in the IDC study, the results of which were published on January 11, 2024.

IDC data accounts for server and storage DSS for public and dedicated clouds. According to estimates, in the first of the indicated segments, costs in 2023 were at the level of $72.2 billion, which is 13.9% more compared to the previous year. The dedicated platforms provided revenue of about $28.3 billion, which corresponds to an increase of 0.3% on an annualized basis.

Analysts note that against the background of the continuing growth of the cloud market, the costs of traditional (non-cloud) infrastructures are reduced. In 2023, a drop of 7.7% was recorded in relation to 2022 - to $58.7 billion. Cloud costs remain high due to existing and new critical workloads that often require high-performance platforms. These are, in particular, tasks related to artificial intelligence and large language models.

Cloud infrastructure costs continue to shift toward powerful configurations to support more complex workloads and new AI initiatives. Although some concerns remain due to economic and socio-political problems, the outlook for 2024 is very positive: cloud spending will recover at double-digit rates throughout the year, says Juan Pablo Seminara, IDC Research Director.

In the long term, IDC believes, global cloud infrastructure costs will have a combined annual growth rate (CAGR) of 10.6% during 2022-2027, reaching $152 billion by the end of this period.^[1]

2022: Cloud server and DSS sales up 19.4%

In 2022, global revenue from the supply of computing equipment and storage systems for cloud environments rose by 19.4%, reaching $87.7 billion. At the same time, sales of products for traditional IT infrastructures on an annualized basis rose by 13.6% - to $66.7 billion. Such figures are reflected in the IDC report published on March 31, 2023.

The published data takes into account shipments of solutions for public (shared) and dedicated (dedicated) platforms. In the first of these segments, costs in 2022 amounted to $61.5 billion, an increase of 20.1% compared to the previous year. In the sector of allocated clouds, an increase in sales by 18% was recorded - up to $26.2 billion. Of the entire dedicated cloud infrastructure, 45.2% was deployed in customer-owned premises.

Global Revenue from Cloud Computing and Storage Increased 19.4%

IDC believes that the market in question will face significant macroeconomic obstacles and limited demand. At the same time, cloud platforms will show positive dynamics against the background of companies' desire for modernization, as well as due to the focus on operating costs. The growth of this industry will also be facilitated by the continued growth in demand for digital consumer services. At the same time, non-paying costs are reduced due to the fact that enterprises are forced to save money in difficult market conditions.

IDC monitors the various categories of service providers and how much computing infrastructure and storage systems these providers purchase. Cloud services, digital services, communications, and managed services are considered. In 2022, service providers spent $87.9 billion, which is 18% more than the previous year: such companies account for 56.9% of the total costs of servers and storage devices. The costs of other participants in the wound on an annualized basis increased by 15.4% - to $66.4 billion.

Geographically, spending on cloud infrastructure in Central and Eastern Europe declined 39.7% in 2022. This is due to the current geopolitical situation, problems in supply channels, high inflation and macroeconomic challenges. In the Middle East and Africa, the most significant growth was recorded - plus 41% on an annualized basis. All other markets, including Asia Pacific, Canada, Latin America and the United States, showed gains in the range of 10-30% compared to 2021.

Cloud infrastructure spending is expected to rise further in all regions except Central and Eastern Europe, the Middle East and Africa. Cost growth depending on the region will reach 10%, and in China it may be almost 20%.

In the long term, IDC analysts believe that the cumulative annual growth rate (CAGR) of cloud infrastructure spending will be 10.5% during 2022-2027. As a result, in 2027, global costs will reach $144.3 billion - this will correspond to 67.6% of total spending on computing infrastructures and storage platforms. Public platforms will account for 71.7% of total server hardware costs: the average annual growth rate will be 11.0%, and in 2027 sales will be at the level of $103.5 billion. Spending on allocated cloud infrastructure will rise at a CAGR of 9.3% and amount to $40.7 billion in 2027. The costs of traditional infrastructure will grow at an average annual rate of 0.7%: by the end of the period under review, they will increase to $69 billion. Service providers' costs for computing and storage are expected to reach $141.3 billion in 2027, demonstrating a CAGR of 10%.^[2]

2021: Global Cloud Server and DSS Sales Up 8.8%

Sales of servers and storage systems (DSS) for the deployment of cloud services in the world in 2021 reached $73.8 billion, an increase of 8.8% compared to 2020. IDC analysts released such data at the end of March 2022.

According to the study, if we take equipment intended for traditional IT environments (non-cloud), then in 2021 this segment showed an increase of 4.2% with a volume of $59.6 billion.

Global spending on IT equipment for public cloud services in 2021 turned out to be $51.4 billion, 7.5% higher than a year ago. Costs for similar solutions for private cloud environments rose by 11.8%, to $22.5 billion.

Global Cloud Server and DSS Sales Up 8.8% Year-over-Year

The study examines the various categories of service providers (cloud providers, digital and communications service providers, and managed service providers) and the volume of their purchases of storage and computing hardware, including for cloud and non-cloud infrastructures. In 2021, such companies purchased servers and DSS in the amount of $75.1 billion, which is 8.5% more than a year earlier, and this corresponds to 56.2% of the total sales of such equipment in the world. IDC expects that the costs of service providers in 2022 will grow even more - by 18.7%, to $89.1 billion.

The Asia-Pacific region showed the highest growth in sales of equipment for cloud infrastructure in 2021 - here costs rose by 43.7%. In Canada, Central and Eastern Europe, Japan, the Middle East and Africa, as well as in China, spending growth was also expressed at double-digit rates. In the United States, sales rose 1.5%, in Western Europe the rise was 1-3%.

According to experts, the growing popularity of clouds is due to the fact that such a model of IT consumption helps to optimize costs (transfer capital costs to operating ones with the ability to pay only for the actually consumed amount of resources) and focus on the specialized activities of the enterprise, increasing its efficiency. Clouds help companies be more flexible and adaptive, quickly adapt to constantly changing conditions, experts say.

Global Cloud Server and DSS Sales Up 8.8% Year-over-Year

An additional impetus for migration to the clouds was the coronavirus (COVID-19) restrictions, due to which organizations urgently had to deploy the infrastructure of remote workplaces. That is why one of the most dynamically developing services is DaaS (Desktop-as-a-Service), according to Gartner, revenue of this area increased by 67.7% in 2021.

Global spending on servers and storage used in cloud services is projected to grow by 12.6% annually and reach $133.7 billion in 2026, according to research firm IDC. This market will account for about 68.6% of total spending on computing and DSS infrastructure. Sales of solutions for private cloud environments will grow by 10.7% per year, for non-cloud infrastructures - by 0.5% per year (up to $61.2 billion by 2026).

According to analysts at Synergy Research Group, infrastructure sales for data centers, including both cloud and non-cloud solutions, amounted to $185 billion in 2021, with cloud infrastructure accounting for 47% of the total volume. Servers, storage and network account for 77% of the data center infrastructure market . Among the software products, the majority are operating systems, virtualization software and network security solutions.^[3]

2019: Cloud Equipment Market Growth by 2.1% to $66.8 Billion

According to IDC analysts, the volume of the global IT equipment market used for cloud services reached $66.8 billion in 2019, which is 2.1% more than a year earlier. We are talking about servers, storage systems and Ethernet switches.

Sales of this cloud infrastructure were close to falling at the end of 2019, as a decline was recorded in the second and third quarters. However, in the fourth quarter, 12.4 percent growth compensated for that negative dynamics and helped the market reach a plus at the end of the year.

The cloud industry is fast growing, unlike the hardware market for traditional (non-cloud) IT infrastructures. The volume of the latter at the end of 2019 decreased by 4.1%, to $67.7 billion. Sales of all servers, storage and switches - both for cloud and other IT infrastructures - reached $134.4 billion in 2019, down 1.1% from a year ago. According to experts, the problems in the market, which were in 2018, remained in 2019.

As cloud IT investment continues to grow and quarterly results shift in both positive and negative directions, the market is approaching the point where cloud spending will be higher compared to traditional solutions, the report pointed out. In 2019, cloud products accounted for 49.7% of the market in question, and during the last three quarters the figure exceeded 50%. Experts believe that, starting in 2019, the cloud segment will occupy more than half of the IT hardware infrastructure market, and by 2024 its share will exceed 60%.

In 2019, the volume of the switching equipment segment for cloud projects amounted to $8.2 billion, rising by 5% compared to 2018. DSS sales increased by 1.9% to $23.1 billion, and in the category of computing platforms, growth was measured at 1.5% with revenue of $35.5 billion.

Sales of IT equipment intended for operation, public cloud environments in 2019 turned out to be equal to $45.2 billion, which almost corresponds to the value of a year ago. In the private cloud sector, hardware spending increased by 6.6% to $21.6 billion.

In their study, analysts did not name the leaders in the cloud hardware market at the end of 2019. However, based on the quarterly breakdown, the largest manufacturers include Dell Technologies, HPE, Cisco, Inspur, Huawei and Lenovo.

According to analysts, the outbreak of the coronavirus COVID-19 did not affect the cloud equipment market in 2019, since it began in December. However, one cannot do without consequences, but they will be with both a minus sign and a plus sign. Thus, the coronavirus pandemic leads to a significant reduction in corporate costs, but, on the other hand, it spurs the demand for cloud services - both for tools for remote work and training. In addition, the company is starting to more actively transfer its processes and applications to the public cloud environment in order to save money.

The study highlights that the rapid growth of the cloud market underscores the steady expansion of the IT industry, which in turn is driven by digital transformation projects across all industries. Companies are increasing their spending on cloud services for computer computing, storage, and other tasks to analyze and benefit from growing data arrays. In addition, the business uses cloud computing to meet its own needs in DevOps practice when creating new applications and services.^[4]

2018: Cloud Equipment Market Growth by 37.2% to $65.2 Billion

On January 10, 2019, analysts at International Data Corporation (IDC)  presented the results of a survey of the equipment market (servers,  storage systems,  Ethernet switches) used to deploy cloud services. In 2018, sales of such products reached $65.2 billion, rising 37.2% compared to the previous year.

Since 2013, when IDC began monitoring IT infrastructure deployment projects in a variety of environments, public clouds have always been a major spending area in the market in question. In 2018, this segment grew by 44.7% and took 68.8% of investments in cloud infrastructure. Sales of IT equipment for private cloud systems jumped 23.3%.^[5]

Cloud hardware accounted for just under half (47.4%) of total IT infrastructure spending in 2018. In the third quarter, the indicator for the first time exceeded 50% and reached 50.9%.

All types of equipment in question used for the functioning of cloud services showed double-digit sales growth in 2018. For example, the volume of the server platform segment rose by 59.1%, and the implementation of DSS and switches jumped by 20.4% and 18.5%, respectively.

IDC does not give the balance of power among the manufacturers of equipment on the basis of which cloud services work for 2018. The study shows only data for the third quarter (see below).

The cloud industry is fast-growing, which cannot be said about the market for equipment designed for traditional IT infrastructures. True, in 2018, this market showed a 12.3 percent rise, although in the first half of the year it sank by 14.8%. The revival was due to the onset of a technology renewal cycle, which will weaken in 2019. It is predicted that by 2022, non-cloud equipment will account for 42.4% of global IT infrastructure spending, compared to 52.6% in 2018.

2017: 20.9% growth in cloud infrastructure hardware sales

In 2017, the volume of the global equipment market (servers, storage systems Ethernet-)switchboards for the deployment of cloud infrastructures reached $46.5 billion, an increase of 20.9% compared to 2016. This is evidenced by preliminary data from analysts. International Data Corporation (IDC)

About 65.3% of this amount came from hardware purchases for data centers in which public clouds were launched. This segment showed growth of 26.2%.

Sales of private cloud solutions in third-party data centers increased by 12.7% to 13% in the total market under consideration. The segment of private clouds deployed at customer facilities showed an 11.5 percent rise.

Cloud Services Hardware Market Forecast, IDC Data

According to experts, the cost of equipment used not for cloud, but for local infrastructures, in 2017 decreased by 2.6%, but accounted for 57.2% of the total costs of companies for servers, DSS and switches. In 2016, this share was higher - 62.4%. The fall in the share of equipment for traditional IT infrastructures turned out to be the strongest in the previous three years.

The demand for cloud solutions is increasing in all regions and technology segments. In 2017, sales of cloud switches and computing increased by more than 22%. Storage sales increased slightly weaker - by 19.2%.

As public and private cloud services are deployed globally to replace traditional on-premises IT infrastructures, total market costs for servers, DSS, and network equipment will follow this trend. The industry is approaching the point where cloud projects will occupy most of the costs of IT infrastructures, which will be an important milestone demonstrating the benefits of IT services, said IDC analyst Natalya Yezhkova.[6]

2016

Less than 10% market growth

On April 6, 2017, analysts at International Data Corporation (IDC) released brief results of a study of the global cloud hardware infrastructure market. Equipment sales growth fell below 10% for the first time.

In 2016, the costs of both companies data centers and servers storage systems - Ethernetswitchboards amounted to $32.6 billion, which is 9.2% less than in 2015.

The largest manufacturers of equipment for cloud data centers, IDC data

According to IDC analyst Cuba Stolarski, the cloud IT infrastructure market began to grow at a less than 10 percent rate due to freezing investments from hyperscale data centers.

Network upgrades are still the focus of public cloud deployment projects, as network bandwidth has become the weakest link in cloud data centers. After a pause made by some operators of hyperscale data centers, the deployment and update of data centers will resume during 2017, and the projects will use new equipment built mainly on the Intel Skylake architecture.

The IDC report said network equipment remains the fastest growing segment of the cloud IT infrastructure market. For example, in October-December 2016, sales of network technology for public clouds rose by 30%, and in the private cloud segment, growth was measured by almost 53%.

The largest manufacturer of equipment for cloud data centers is still, Dell Technologies whose market share in 2016 was 17.6% (in revenue). Not far from the leader is located Hewlett Packard Enterprise with a 16.3 percent indicator. The top three included (Cisco 11.6%). The highest growth rate of revenue (62.3%) in 2016 showed, the Huawei share of which was measured by 3.7%.

HPE, Cisco and Dell share leadership

In March 2017, analysts at Synergy Research Group presented the results of a study of the global cloud infrastructure market. Leadership is shared by several companies at once.

According to Synergy Research estimates, in 2016, global sales of equipment (storage systems, network hardware, servers) and software ( operating systems, virtualization tools) used in data centers for cloud services reached $70 billion. More than 27% of these expenses fell on the final calendar quarter.

Dynamics of companies' share in the cloud infrastructure market, Synergy Research data

The pace of growth in the implementation of IT solutions for launching private clouds is decreasing, while in the segment of public clouds there is a high dynamics measured by double-digit indicators.

While spending on cloud services and infrastructure is already huge, moving companies' workloads to the clouds is still in its early stages. This means that success in the cloud infrastructure market is important for IT vendors, and they will fight long and hard to increase market share, "said Synergy Research analyst John Dinsdale.

By the end of 2016, three companies are leading the global cloud infrastructure market: Hewlett Packard Enterprise (HPE), Cisco and Dell Technologies. The latter joined the leadership group as a result of the EMC takeover.

According to researchers, HPE, Cisco and Dell each have about 11.5% of global sales of hardware and software for cloud services. Approximately the same share is jointly owned by contract (ODM) manufacturers due to the continuing high costs of operators of hyperscale data centers for equipment developed by ODM companies. Leading players in the market also include Microsoft and IBM. The first of them leads in the sector of server operating systems.^[7]

2015: Cloud Infrastructure Hardware Market Growth by 22%, HPE Leads

In April 2016, the analytical company IDC published the results of a study of the global cloud infrastructure market. Its volume is up 22%, with Hewlett-Packard Enterprise (HPE) still holding the lead.

According to experts, in 2015, the costs of companies for the purchase of servers, storage systems and Ethernet switches used in data centers for deploying cloud services amounted to almost $29 billion, compared to $23.8 billion a year earlier. The share of sales of cloud solutions in the total amount of equipment costs for corporate IT infrastructure for the year increased from 28.6% to 32.2%.

Cloud Services Hardware Market Size Up 22%

In 2015, approximately 19% of cloud hardware sales came from public cloud solutions. The share of the private cloud segment was 11.3%.

In 2015, the total revenue of vendors from sales of servers used to launch private cloud solutions rose by 23%, and the volume of the segment of switching equipment for public clouds jumped by 36.6%.

For many commercial and government organizations, IT is not a key business, but a means of realizing their main tasks, "says Natalya Yezhkova, IDC Storage Market Research Director. - Expanding the range of cloud offerings provides these companies with new opportunities to focus on specialized competencies, taking advantage of flexible IT services.

Largest Cloud IT Infrastructure Manufacturers, Q4 2015 Data

Analysts predict that in 2016 the global cloud infrastructure market will grow by 19% compared to 2015 and reach $38.2 billion. In 2020, the cost of this equipment will be measured at $57.8 billion, and the average annual market growth rate will be 12.5%.

Data for 2015

In 2015, a group of cloud hardware market leaders remained the same. HPE ranked first with a 15.8 percent share, while Dell (10.2 percent) and Cisco (9.7 percent) were next.^[8]

2014

EMC's revenue from data center solutions skyrocketed by a third. HP backs down

On April 16, 2015, the analytical company IDC published the results of a study of the global cloud infrastructure market. Its volume in 2014 grew by 18.7%, and HP's leadership weakened.^[9]

As reported in the regular summary of IDC Worldwide Quarterly Cloud IT Infrastructure Tracker, in 2014, sales of servers, storage systems and Ethernet switches acquired for the deployment of cloud infrastructures amounted to $26.4 billion against $22.3 billion a year earlier.

Spending on equipment for public clouds increased by 17.5%, reaching $16.5 billion. In the segment of private cloud services, equipment sales rose by 20.7% to $10 billion.

"The transition to cloud and data management architectures in enterprise data centers continues to accelerate. At the same time, the expansion of public cloud infrastructures in service provider data centers is a stronger stimulus for IT spending growth worldwide, "said IDC analyst Richard Villars.

According to experts, in the fourth quarter of 2014, the global cost of equipment for launching public and private cloud services amounted to 30% of the total investment of companies in IT infrastructures. A year earlier, this share was measured at 27%.

According to Richard Villars, the key driver of the rise in the cloud infrastructure market is Internet of Things services, which require the level of flexibility and scalability that only cloud solutions provide.

In 2014, the top three cloud infrastructure solutions manufacturers did not change, but HP's leadership position weakened. The company's revenue in the market under consideration increased by 6.3% to $3.7 billion, which corresponds to 15.7% in global sales of cloud equipment against 17.4% a year earlier.

Major Cloud Hardware Manufacturers, 2014 IDC Data

HP's declining market share is due to competitor activity. For example, Cisco and EMC in 2014 increased the implementation of equipment for cloud infrastructures by 21.2% and 34.3%. This allowed companies to get closer to Dell, which ranks second in the list of vendors.

Microsoft is one of the three largest cloud infrastructure providers

On March 12, 2015, Synergy Research Group published a research report on the global market for cloud infrastructure deployment and maintenance solutions. Experts include servers, network and computing platforms, as well as storage resources.^[10]

According to analysts, in the fourth quarter of 2014, sales of hardware and software for cloud infrastructures on a global scale amounted to more than $13 billion, which is 9% more than in the last three months of 2013.

The leadership in the market under consideration is retained by Cisco and HP, whose combined share is measured at 27%. However, on an annualized basis, this indicator decreased, since sales growth for these companies was lower than the market average.

Microsoft is one of the three largest cloud infrastructure providers

Cisco is the largest manufacturer in the public cloud infrastructure segment, while HP ranks first in the supply of private cloud solutions.

Cisco's overall dominance is largely due to the fact that the company is practically unparalleled in terms of the size of network equipment sales. In addition, the vendor is rapidly strengthening its position in the global server market, where Cisco's share grew to 5.3% in 2014 (data IDC).

According to Synergy Research, HP leads the supply of cloud servers, and is also a major provider of disk storage and a growing competitor to Cisco in the network equipment market.

Microsoft holds the palm among developers of server operating systems and is one of the leaders in the virtualization technology market. In October-December 2014, the American corporation became one of the three largest providers of solutions for deploying and servicing cloud infrastructure, according to analysts at Synergy Research, leaving behind Dell and IBM.

The latter, it is worth noting, was the market leader at the end of 2012, but in two years it lost its position. A significant role in this was played by the sale of part of the server business to Lenovo, which, thanks to the deal, climbed to seventh place in the list of manufacturers of cloud equipment.

2013: Cisco bypasses HP and IBM in cloud hardware market

In early 2013, Cisco managed to bypass HP and IBM in terms of the share of revenue from the sale of equipment for cloud solutions in the overall revenue structure, and this despite the fact that other vendors are the strongest players in the cloud market. However, as follows from the Synergy Research Group report published in June 2013, in the first quarter of 2013, Cisco Systems earned 15% of the $9 billion in revenue from cloud computing during these three months.

For comparison, the share of cloud hardware in revenue in the first quarter of 2013 for IBM and HP was 14%, respectively, Dell - 9%, EMC - 7%, VMWare - 4%, NetApp and Oracle - 4% and 3%, respectively, said Synergy Research Group analyst John Dinsdale.

Cloud Computing Hardware Market, Q1 2013

Synergy Research Group, 2013

However, experts warn, Cisco will be quite difficult to maintain its leadership in this segment, since the company owes much of its takeoff in early 2013 to the weak results shown by the server divisions of HP and IBM.

However, analysts have established another interesting fact: 30% of the costs of "cloud" equipment will generally pass the "pockets" of megavendors and are sent to smaller suppliers. This is because large internet companies such as Google, Facebook, Rackspace and others prefer to buy not ready-made servers, but create their own, negotiating directly with component manufacturers.

According to earlier IHS iSuppli forecasts, cloud server shipments will reach 875,000 units in 2012, an increase of 35% compared to 2011 and almost doubled compared to 2010. Experts expect high growth rates ranging from 23% to 30% over each of the next three years until 2015, when the total volume of cloud server deliveries will reach 1.8 million units. Thus, cloud servers will make up an increasing part of the total number of servers whose shipments will grow from just over 5% of the market in 2010 to 15% in 2015, IHS iSuppli suggests.

See also

• Data Center Infrastructure (Global Market)
• Cloud Computing (Global Market)
• IT Infrastructure Solutions (Global Market)

Notes