The 20 largest cloud and internet providers splurged almost $120bn in capital expenditure last year with most of the funds going towards furnishing racks in their vast data centres.
According to Synergy Research Group, the amounts invested by the likes of Google and Microsoft into physical assets such as buildings and equipment increased by 43 per cent in a single year. Meanwhile, capex spending by telecommunications providers remained flat at 2016 levels.
This doesn't mean telcos invest less in their infrastructure – Synergy noted that the 40 largest telecommunications firms forked out more than $240bn over the past year to support their networks and services.
But while investment in telecomms remained unchanged, each quarter of 2018 saw a new record in hyperscale spending, mounting to $32bn in Q4.
It will come as a surprise to absolutely no one that the top five hyperscale spenders in 2018 were Google, Amazon, Microsoft, Facebook and Apple. What is interesting is the fact their spending roughly matched the top five in the telecommunications sector – China Mobile, AT&T, Verizon, NTT and Deutsche Telekom.
"The hyperscale operators are quickly becoming the capex kings of the IT world," said John Dinsdale, chief analyst at Synergy. "On average, hyperscale operator revenues are growing by 20 per cent per year, driven by expansion of cloud services, e-commerce, social media and online advertising; and it is notable that the leading players are investing an ever-increasing share of their revenues into capex. This is in stark contrast to telcos who are seeing neither revenues nor capex growing. We do not see these trends changing any time soon."
In January, Synergy reported that the number of hyperscale data centres worldwide reached 430, and it has since added another nine facilities to the list.
Synergy does not share its exact definition of "hyperscale" – only hinting that the term is connected to the cost of the facilities. ®