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The hyperscale cloud and internet giants spent more on building out their global presence in the first six months of this year than they did during the whole of 2015, Synergy Research data shows.
The market watcher’s second-quarter look at the capital expenditure habits of 20 of the world’s biggest cloud and internet service providers revealed a 59% year-on-year uptick in collective investment by this group.
During the first six months of 2018, the group paid out $53bn in capital expenditure (capex), compared with $31bn during the first half of last year.
This level of spend is the main reason why Amazon, Microsoft and Google, for example, are continuing to extend their lead in the public cloud market, said Synergy in a research note.
“The leading cloud providers are increasing their share of a market that is growing at dramatic rates, and the others cannot keep up with them,” the note stated.
Overall, the top five hyperscale spenders are Amazon, Apple, Facebook, Google and Microsoft, which have led the group for the past 10 quarters, and collectively account for more than 70% of the capex paid out by the entire top 20 list.
Much of this expenditure is used to build new datacentres or expand existing facilities, said Synergy, and the number operated by the top 20 list of hyperscalers now stands at around 420.
“Hyperscale capex is one of the clearest indicators of the growth in cloud computing, digital enterprise and online lifestyles,” said John Dinsdale, chief analyst at Synergy Research Group.
“Capex has reached levels that were previously unthinkable for these massive datacentre operators and it continues to climb.
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“The largest of these hyperscale operators are building economic moats that smaller competitors have no chance of replicating. In cloud computing especially, the ability to fund hyperscale capex levels has become a competition killer,”
The year-on-year growth noted by the second-quarter market tracker is all the more notable because Synergy has omitted four companies from its analysis this time, including LinkedIn, now its merger with Microsoft has been completed. The other three, however, are excluded partly because they do not spend enough to warrant further inclusion in its research.
“Part of the reason for that is that they are themselves pushing more of their workloads onto AWS (and Microsoft Azure) and reducing their own datacentre footprint,” the research note said.
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