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Private cloud infrastructure spending holding steady

An analysis of Q2 from IDC indicates that public cloud infrastructure spending weakened but sales on the private side held up

Those selling private cloud IT infrastructure have experienced more stable trading conditions than those looking for growth on the public side of the market. 

With just a handful of hyperscalers dominating the public cloud space the fortunes of those selling infrastructure into that area are at the mercy of the spending behaviours of those large customers. As a result worldwide vendor revenues from selling server, storage and ethernet switches into that side of the market was down 15.1% year-on-year in the second quarter, according to IDC. 

The analyst house found that private cloud hardware infrastructure spending had remained more stable, increasing in Q2 by 1.5% compared to the same period last year. IDC is expecting the public cloud market to cool over the rest of this year as the current market conditions continue. 

Those still selling infrastructure into non-cloud environments have been warned that although it still accounts for slightly more than 50% of the market in the long-term that number is only going to head in one direction, downwards. IDC is forecasting that cloud infrastructure will grow and take the majority of spending from next year onwards. 

MEA and Canada were the fastest growing markets for cloud IT infrastructure in Q2, recording double digit growth, with Western Europe coming in with a 3.1% improvement. 

The majority of those in the channel selling cloud infrastructure have been looking to provide the customer with as much choice as possible and service a hybrid world. There are signs that skill shortages are another factor also making it difficult for users, along with the challenges of operating a multi-cloud strategy. 

Recent findings from VirtuStream, which commissioned 451 Research to investigate the state of the market, indicated that managed service providers were being leaned on by an increasing number of customers because the skills around cloud were not there internally. 

The headline finding was that 70% of enterprises were looking to cloud managed services providers to help them get the most out of a hosted environment.  The report also found that more than half of businesses (57%) were opting for a hybrid environment and using both private and public clouds as places to store data. 

There was also a sense that the current hurdles that customers had to jump over were not just around a debate of public or private but were technical. Users were concerned that they needed to meet regulatory and security guidelines and migrating workloads could cause disruption to existing systems and change the cost model.  

“While enterprise companies are astutely aware of the breadth of cloud options available to them today, they are looking to cloud managed services partners to bridge their own in-house skills and resources gaps, and for access to their deep expertise across cloud assessment, planning, migration and domain experience,” said Melanie Posey, research vice president & general manager, voice of the enterprise, 451 Research. 

Joy Corso, senior vice president and CMO at Virtustream, added: “Organizations face a constant challenge to maximize and modernize their IT investments to future-proof their businesses.” 

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