Analyst firm IDC has suggested Q2 2020 was a tipping point because it was the first quarter in which sales of IT infrastructure products for cloud environments topped sales for non-cloud infrastructure.
IDC’s definition of “cloud” includes servers, storage and switches for public and private clouds, so the news is not a sign that on-prem hardware is now in the minority.
Indeed, the firm found $5bn was spent on private cloud infrastructure, with 64.1 percent installed on-premises. This class of kit saw a seven percent year-over-year jump. Which is nice, but trailed the 34.4 percent jump across all cloudy kit.
By contrast, spend on traditional, non-cloud, IT infrastructure declined 8.7 percent year-over-year, according to the firm's Worldwide Quarterly Cloud IT Infrastructure Tracker.
It will come as no surprise to most readers that the COVID-19 pandemic had a bit to do with this result.
“These growth rates show the market response to major adjustments in business, educational, and societal activities caused by the COVID-19 pandemic and the role IT infrastructure plays in these adjustments,” IDC wrote. “Across the world, there were massive shifts to online tools in all aspects of human life, including collaboration, virtual business events, entertainment, shopping, telemedicine, and education. Cloud environments, and particularly public cloud, were a key enabler of this shift.”
Which is why public cloud spending increased 47.8 percent year-over-year in the quarter to $14.1bn.
Across the world, there were massive shifts to online tools in all aspects of human life
“IDC believes the hardware infrastructure market has reached the tipping point and cloud environments will continue to account for an increasingly higher share of overall spending,” the firm said, adding that it now expects investments in cloud IT infrastructure will account for 54.8 of spend this year. And as the graph above shows, by 2024 it will account for perhaps two thirds of all spending.
“Long term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 10.4 percent, reaching $109.3 billion in 2024 and accounting for 63.6 percent of total IT infrastructure spend. Public cloud datacenters will account for 69.4 percent of this amount, growing at a 10.9 percent CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.3 percent. Spending on non-cloud IT infrastructure will rebound after 2020 but will continue to decline overall with a CAGR of -1.6 percent.”
Which will still leave old-school servers, storage and switches with about $40bn of annual sales to scrap over. ®