ldprod - stock.adobe.com
The hyperscale cloud and internet giants should be relatively well-insulated against the economic fallout from the Covid-19 coronavirus, Synergy Research Group has suggested.
The market watcher said hyperscale operators were well-positioned to “ride out the crisis”, particularly with so many involved in the hosting and provision of digital services that businesses and consumers are increasingly turning to for work and leisure purposes.
“Synergy believes that hyperscale operators are better positioned than most types of companies to ride out the crisis, and they will benefit from tailwinds in some of their business areas,” stated John Dinsdale, chief analyst at Synergy Research Group.
“While there are many unknowns [surrounding coronavirus], what is clear is that the hyperscale operators generate well over 80% of their revenue from cloud, digital services and online activities,” he continued.
“The radical shifts we are seeing in social and business behaviour will actually provide some substantive tailwinds for many of these businesses. These hyperscale firms are much better insulated against the current crisis than most others, and we expect to see ongoing, robust levels of capital expenditure.”
His comments coincided with the publication of Synergy’s quarterly look at the global capital expenditure (capex) habits of the hyperscale cloud and internet giants, which revealed that their datacentre spend was up by 11% year-on-year in 2019.
John Dinsdale, Synergy Research Group
Synergy’s research suggested the bulk of this spend occurred during the second half of 2019, with a record $32bn of spending recorded by the sector in the final quarter of the year.
“Previously, the fourth quarter of 2018 had set the record for hyperscale capex, but the final quarter of 2019 marginally topped those numbers,” said Dinsdale.
“While full-year 2019 capex was up only 1% from 2018, a notable feature was that spending focused specifically on datacentres grew by 11%, as hyperscalers needed ever bigger and more fully featured datacentre networks.”
As a result of this investment, by the end of 2019, there were a total of 512 hyperscale datacentres worldwide, according to Synergy’s data, up from 430 at the start of last year.
Amazon, Facebook and Microsoft were called out by the research firm as being among the sector’s top five biggest spenders, along with Google and Apple. However, the latter firm experienced a marked drop-off in its capex spend over the course of the year, said Synergy, which had a dampening effect on the market’s growth as a whole.
“As expected, there was a significant boost in hyperscale operator capex in the second half of 2019, which helped to counter a relatively soft start to the year. Most notable was that annual spending on datacentres grew at double-digit rate, despite total capex being somewhat flat,” added Dinsdale.
Read more about datacentre trends and coronavirus
- Staff email warns that “decisions” made now in response to coronavirus pandemic could have far-reaching consequences for ongoing efforts to decommission former nuclear power plant.
- Ensuring their IT infrastructure is equipped to cope with the sudden surge in employees accessing on-premise and cloud applications from remote locations in response to the Covid-19 coronavirus outbreak is a challenge facing many CIOs right now.
- Datacentre resiliency think-tank issues 18-page guidance to help operators protect staff during the coronavirus pandemic while keeping their facilities ticking over.
- TechUK positioning document reveals datacentre operators are putting their competitive differences aside to share best practice on how to keep staff safe and keep the UK online during the coronavirus outbreak.
Read more on Datacentre capacity planning
Synergy Research highlights how rise of the hyperscalers has hit on-premise datacentres
Enterprise on-premise infrastructure spending experiences ‘post-pandemic’ bounce-back
Public cloud ecosystem revenue soars in line with enterprise demand for services during Q1
Average size of hyperscale datacentres is on the rise