Vendor revenues from sales of IT infrastructure products (servers, enterprise storage, and Ethernet switches) for cloud environments, including public and private cloud, has declined in the 3rd quarter of 2019, according to IDC. The decline in cloud IT infrastructure spending was driven by the public cloud segment, which was down 3.7% year over year, reaching $11.9 billion. This public cloud IT segment is expected to reach $44 billion in sales for the full year 2019, a decline of 3.3% from 2018.
This is the outcome of IDC’s latest Worldwide Quarterly Cloud IT Infrastructure Tracker. The announcement by IDC follows the outcome of its previous quarterly Tracker, in the 2nd quarter of 2019, when IDC announced a decline in vendor revenue from sales of IT infrastructure products of 10.2% year-over-year.
The overall IT infrastructure market is experiencing weakening sales in Q3 2019 following strong growth in 2018. The decline of 1.8% year over year was much softer than in 2Q19 though, as the overall spend on IT infrastructure for cloud environments reached $16.8 billion. IDC has slightly increased its forecast for total spending on cloud IT infrastructure in 2019 to $65.4 billion, which would represent flat performance compared to 2018.
Across the three IT infrastructure domains (servers, enterprise storage, and Ethernet switches), Ethernet switches is the only segment expected to deliver visible year-over-year growth in 2019, up 11.2%, while spending on compute platforms will decline 3.1% and spending on storage will grow just 0.8%. Compute will remain the largest category of cloud IT infrastructure spending at $34.1 billion.
Private Cloud Growth
Despite softness, public cloud continues to account for most of the spending on cloud IT environments. However, as demand for private cloud IT infrastructure is increasing, the share of public cloud IT infrastructure continued to decline in 2019 and will be declining slightly throughout the forecast period.
Spending on private cloud IT infrastructure has shown more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments. In 3Q19, vendor revenues from private cloud environments increased 3.2% year over year, reaching nearly $5 billion. IDC expects spending in this segment to grow 7.2% year over year in 2019 to $21.4 billion.
U.S., Western Europe, Latin America
Geographically, the cloud IT Infrastructure segment had a mixed performance in Q3 2019. Declines in the U.S., Western Europe, and Latin America were driven by overall market weakness; in these and some other regions Q3 2019 softness in cloud IT infrastructure spending was also affected by comparisons to a strong Q3 2018.
In Asia/Pacific (excluding Japan), the second largest geography after the U.S., spending on cloud IT infrastructure increased 1.2% year over year, which is low for this region. However, it is in comparison with strong double-digit growth in 2018. Other growing regions in Q3 2019 included Canada (4.9%), Central & Eastern Europe (4.6%), and Middle East & Africa (18.1%).
Long-term, IDC expects spending on cloud IT infrastructure to grow at a 5-year compound annual growth rate (CAGR) of 7%, reaching $92 billion in 2023 and accounting for 58.1% of total IT infrastructure spend. Public cloud data centers will account for 66.3% of this amount, growing at a 6% CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.2%, according to IDC.