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Cloud IT infrastructure revenues rising despite spending drops

An analysis of the IT infrastructure market from IDC shows that spending will slow this year but vendors do not look like missing out on revenues

Non-cloud infrastructure sales are continuing to decline with all the attention going on those servers, storage products and Ethernet switches being used to support hosted environments.

Even with a slowdown in spending this year the big hardware vendors and their channel partners will get to see cloud infrastructure revenues continue to increase, according to IDC.

The analyst house has lowered its forecast for total spending on cloud IT infrastructure by 4.5% this year in response to slow growth in the market.

One of the problems for those trying to read the runes with this sector of the market is the impact that a handful of large cloud companies have in driving sales and IDC is expecting things to cool down this year.

"As the overall IT infrastructure goes through a period of slowdown after an outstanding 2018, the important trends might look somewhat distorted in the short term," said Natalya Yezhkova, research vice president, Infrastructure Systems, Platforms and Technologies at IDC.

"IDC's long-term expectations strongly back continuous growth of cloud IT infrastructure environments. With vendors and service providers finding new ways of delivering cloud services, including from IT infrastructure deployed at customer premises, end users have fewer obstacles and pain points in adopting cloud/services-based IT," she added.

IDC's analysis of Q1 found that vendor revenue from hardware infrastructure sold into public cloud environments was down 13.4% year-on-year, but compared to Q4 it improved 8.9%. Spending on private cloud was positive with revenues climbing 16.9% year-on-year.

Back in the third quarter of last year the infrastructure went past a tipping point with cloud over taking traditional environments but it has since slipped back to under the 50% mark to 48.8% of vendor revenues. But in the longer term the sales into traditional environments will continue to decline with a 3.5% drop coming in 2019.

From a vendor point of view Dell remains out in front with a 17.8% market share, followed by HPE and then Cisco and Lenovo.

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