Growth of hyperscale operators risks squeezing smaller players out of cloud, research warns

The growing hold the hyperscale datacentre operators have on the cloud market risks squeezing smaller providers out, warns Synergy Research Group’s latest report.

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The analyst house has tracked the growth of the hyperscale operators since 2012, and singled out 24 firms – including the likes of Amazon, Google, Microsoft and IBM – who fall into this category.

Synergy claims the hyperscale datacentre operators collectively accounted for around 47% of the overall cloud infrastructure services and software market, when it first started tracking the market.

Fast forward to 2016, and the company claims 68% of the providers in the cloud infrastructure services market can now be classified as hyperscalers, and 59% of software as a service (SaaS) firms also fall into this category.

According to Synergy’s estimates, these firms operate close to 320 large datacentres, across multiple geographies, and as their presence increases the non-hyperscale cloud firms may find themselves struggling to compete.

“The scale of infrastructure investment required to be a leading player in cloud services or cloud-enabled services means that few companies are able to keep pace with the hyperscale operators,” said Synergy Research Group, in a statement.

“They continue to both increase their share of service markets and account for an ever-larger portion of spend on datacentre infrastructure equipment – servers, storage, networking, network security and associated software.”

The impact the hyperscale cloud firms are having on the IT landscape has emerged as a major talking point amongst the analyst community over the past year or so.

Indeed, CBRE set out details of how the spending power of the hyperscalers means they now have the clout to dictate to colocation firms how to build out their new sites in February 2017.

Meanwhile, with many hyperscale firms favouring the use of original design manufacturers’ (ODM) hardware, and white-box servers Synergy, among others, have pointed to the destabilising affect this is having on the sales of big-brand IT hardware sales.

John Dinsdale, chief analyst and research director at Synergy Research Group, backed this point, and stated the growth of the hyperscale datacentre providers is having a wide range of impacts on the IT industry.

“They are reshaping the services market, radically changing IT spending patterns within enterprises, and causing major disruptions among infrastructure technology suppliers,” he said. “Our latest forecasts show these factors being accentuated over the next five years.”