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The toll cloud computing’s rise to prominence has taken on enterprise appetites for datacentre hardware and software over the course of the past decade is revealed in the latest report from Synergy Research Group.
The analyst house has marked the start of the new decade by embarking on a series of in-depth reviews of enterprise IT spending trends, with the first focusing on cloud and datacentre technologies.
Its findings concluded that investments in datacentre hardware and software have largely “stagnated” over the course of 2010-2019, while the amount spent on cloud services has grown from “virtually nothing” to $97bn.
The time period has seen enterprise IT buyers step up efforts to downsize their corporate datacentres, and outsource more of their IT infrastructure requirements to public cloud providers, such as Amazon Web Services (AWS), Microsoft and Google.
“Overall, enterprises have tripled their spending on buying or accessing datacentre facilities, but cloud providers like Amazon and Microsoft have become the main beneficiaries of that spending,” said John Dinsdale, chief analyst at Synergy Research Group.
According to its market data, Synergy Research Group claims – over the course of the decade – the average annual spending growth for datacentres was in the region of 4%, while investments in cloud services grew at 56%.
Out of all the years covered by the review, 2018 is called out as being significant because enterprise datacentre investment levels experienced an uptick, despite server shipment levels remaining flat.
As reported by Computer Weekly at the time, datacentre hardware manufacturers were blighted by semiconductor and DRAM component shortages in 2018. This, in turn, led to a consequential rise in the average selling price of servers, resulting in enterprises having to pay out more to acquire them.
More recently, though, the market watcher claims 2019 will go on record as being the first year that enterprises spent more on cloud services than they did on datacentre equipment and associated software.
At the time of writing, data on how spending on datacentre hardware and software fared during the final quarter of 2019 is still in the process of being accrued, but Synergy Research Group’s full-year forecast suggests it will top $93bn once the final figures are in.
“The major segments with the highest growth rates over the decade were virtualisation software, Ethernet switches and network security. Server share of the total datacentre market remained steady while storage share declined,” said the company, in a research note.
From a server market perspective, Dinsdale said more than half of all servers sold these days are now being installed in cloud provider datacentres, which is indicative of how enterprise appetites for on-premise applications and workloads have waned over the course of the last decade.
“The decade has seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, pointing to an ever-growing need for datacentre capacity,” he added. “However, over half of the servers now being sold are going into cloud providers’ datacentres and not those of enterprises.”
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