IDC: Cloud Infrastructure Spending Decreased in Q2 2021

In the second quarter of 2021, IDC has reported a 2.4 percent reduction in spending on computer and storage infrastructures for cloud facilities, including dedicated and shared environments, to $16.8 billion in total. This reduction in cloud infrastructure spending comes after six quarters of year-over-year growth.

It most notably compares to the 39.1% annual growth seen by the market in Q2 2020, when the world just entered the pandemic with the first wave of business and country closures which caused a boost in cloud services and infrastructure investments.

Investments in non-cloud infrastructure increased 3.4% year over year in Q2 2021 to $13.4 billion in total, recovering from a 7.2% decline in Q2 2020.

‘Steady Demand for Shared Cloud Infrastructure’

Shared cloud infrastructure spending amounted to $11.9 billion, down by 6.1% from Q2 2020, and up 17% from the Q1 2021. Deficit in public cloud services suppliers’ year-over-year demand stems from an especially powerful Q2 2020, which boosted expenditure 55% because to the growth in cloud service demand in the early months of the epidemic. The growth rates of extraordinary occurrences are diverging in such a way that ‘hard’ comparisons do not reflect long-term trends.

IDC expects to see a steady demand for shared cloud infrastructure that exceeds non-cloud infrastructure expenditure by 2022. Cloud infrastructure spending grew 7.8 per cent a year in Q2 2021 to $4.9 billion, with 46.5 per cent spent on client sites. IDC thinks that non-cloud settings will continue to surpass its predictions.

‘On Track for Cloud Spending Growth in the Full Year’

IDC forecasts a 12 percent increase to $74.3 billion in 2021, despite the weaknesses in Q2 2021 just mentioned, while a non-cloud infrastructure is anticipated to increase by 2,7% to $58.9 billion after two years of decreases. Shared cloud infrastructure is anticipated to increase annually to $51.4 billion in full-year growth by 11.1 percent. Cloud spending is anticipated to rise by 14.1% to $22.8 billion in the entire year.

As part of their Worldwide Quarterly Tracker, IDC analyzes several kinds of service providers as well as their calculations and storage infrastructure, including both cloud and non-cloud. Cloud service providers, digital providers, communications providers and managed service providers (MSPs) are under the category of service providers.

In Q2 2021, service providers as a group spent $17.1 billion on compute and storage infrastructure, down 1.9% from 2Q20 and up 13.6% from 1Q21. This spending accounted for 56.5% of total compute and storage infrastructure market. IDC predicts that compute and storage spending by service providers will reach $74.6 billion in 2021, growing at 10.5% year over year.

On a regional basis, year-over-year trends in spending on cloud infrastructure were mixed: spending increased across the Asia/Pacific subregions, in Latin America, Canada, and Central and Eastern Europe, and declined in the United States, Western Europe, and the Middle East and Africa. Canada saw the greatest annual rise in cloud infrastructure spending in 2Q2 2021 at 25.6% while Western Europe recorded the strongest decline at 8.8%. For the full year, spending on cloud infrastructure is anticipated to grow in all regions compared to 2020.

Long term, IDC anticipates spending on compute and storage cloud infrastructure to have a compound annual growth rate (CAGR) of 12.4% over the 2020-2025 forecast period, reaching $118.8 billion in 2025 and accounting for 67.3% of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 69.9% of this amount, growing at a 12.4% CAGR. Spending on dedicated cloud infrastructure will grow at a CAGR of 12.3%. Spending on non-cloud infrastructure will rebound in 2021 but will flatten out at a CAGR of 0.1%, reaching $57.7 billion in 2025. Spending by service providers on compute and storage infrastructure is expected to grow at a 11.2% CAGR, reaching $115 billion in 2025.

IDC’s Worldwide Quarterly Enterprise Tracker is meant to better identify what part of the computer and storage hardware markets are deployed in cloud settings for customers. Buyer and Cloud Deployment are designed. The Tracker divides revenues of each vendor into shared cloud settings for historical information and offers a 5-year projection.

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- Koen Stegeman, Editor-in-Chief and CEO