RENO, Nev. — New data from Synergy Research Group shows that hyperscale operators accounted for 33% of all spending on data center hardware and software as of the third quarter (Q3) of 2019, up from 26% in Q3 2017 and 15% in Q3 2014. Over that same period, the total market has increased in size by over 34%, with the vast majority of the growth resulting from increased spending by hyperscale operators. Spending by enterprises and service providers has risen by just 6%.
The increase in hyperscale spending is driven by the burgeoning demand for public cloud services and continued strong growth in social networking. Meanwhile, enterprise spending has remained under pressure primarily due to the ongoing shift in workloads from private networks to the public cloud. Hyperscale operators include the world’s largest providers in the fields of infrastructure, platform, or software as a service (IaaS, PaaS, SaaS), search, social networking, and e-commerce.
Total data center infrastructure equipment revenues, including both cloud and non-cloud hardware and software, were $38 billion in Q3. Servers, operating system, storage, networking, and virtualization software combined accounted for 96% of the data center infrastructure market — network security and management software comprise the remainder.
“We are seeing very different scenarios play out in terms of data center spending by hyperscale operators and enterprises,” said John Dinsdale, a chief analyst at Synergy Research Group. “On the one hand, revenues at the hyperscale operators continue to grow strongly, driving increased demand for data centers and data center hardware. There is an ever-increasing number of hyperscale data centers, many of which continue to be expanded. Those huge data centers are crammed full of servers and other hardware, which are on a frequent refresh cycle. On the other hand, we see a continued decline in the volume of servers being bought by enterprises. The impact of those declines is balanced by steady increases in average server selling prices, as IT operations demand ever-more sophisticated server configurations, but overall spending by enterprises remains almost flat. These trends will continue into the future.”