IDC Forecast: Strong Growth Cloud Infrastructure Spending in 2022

IDC Research

In the fourth quarter of 2021 spending on compute and storage infrastructure products for cloud infrastructure, comprising dedicated and shared environments, climbed 13.5 percent year over year to $21.1 billion, according to IDC’s latest report. In 2022, cloud infrastructure investment is expected to increase by 21.7 percent to $90.0 billion.

Due to supply chain limitations, vendor stockpiles have been reduced for several quarters. Q4 2021 was the second straight quarter of year-over-year increase. Pent-up demand bodes good for future growth as backlogs continue to build, as long as the economy would remain robust while supply catches up to demand. Cloud infrastructure investment was $73.9 billion for the full year 2021, an increase of 8.8 percent over 2020.

Non-cloud infrastructure investments climbed by 1.5 percent year over year to $17.2 billion in Q4 2021, representing the fourth consecutive quarter of growth. Non-cloud infrastructure investment climbed 4.2 percent year over year in 2019, hitting $59.6 billion.

Spending on shared cloud infrastructure hit $14.4 billion in the fourth quarter, up 13.9 percent from a year earlier, and is expected to reach $51.4 billion in 2021, up 7.5 percent. According to IDC, demand for shared cloud infrastructure will continue to grow, with investment predicted to surpass non-cloud infrastructure spending in 2022. 

Dedicated cloud infrastructure spending jumped 12.5 percent year over year to $6.7 billion in Q4 2021, and increased 11.8 percent to $22.5 billion for the full year 2021. In Q4 2021, 47.5 percent of dedicated cloud infrastructure was deployed on client premises, and 46.1 percent in 2021.

2022: 21.7% Growth in Cloud Infrastructure Spending

Cloud infrastructure investment is predicted to climb 21.7 percent to $90.0 billion in 2022, according to IDC, while non-cloud infrastructure spending is expected to fall 0.3 percent to $59.4 billion. For the whole year, investment on shared cloud infrastructure is predicted to increase by 25.5 percent year over year to $64.5 billion. In 2022, dedicated cloud infrastructure spending is estimated to climb 13.1% to $25.4 billion.

IDC examines several kinds of service providers and how much computing and storage infrastructure they buy, including both cloud and non-cloud equipment, as part of their report, ‘Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment.’ Cloud service providers (CSPs), digital service providers, communications service providers, and managed service providers (MSPs) are all included in the service provider category.

Service providers spent $21.2 billion on computing and storage infrastructure in Q4 2021, an increase of 11.6 percent over Q4 2020. 55.4 percent of total compute and storage infrastructure investment was spent on this. Service providers spent $75.1 billion in 2021, an increase of 8.5 percent year over year, accounting for 56.2 percent of overall compute and storage infrastructure investment. According to IDC, service providers will spend $89.1 billion on computing and storage in 2022, up 18.7 percent year over year.

In Q4 2021, spending on cloud infrastructure grew year over year in the majority of areas. Asia/Pacific (excluding Japan and China) (APeJC) rose the greatest, with a year-over-year increase of 59.5 percent. Spending increased by double digits in Canada, Central and Eastern Europe, Japan, the Middle East and Africa, and China (PRC).

The U.S. economy rose by 5.6 percent. For the quarter, Western Europe and Latin America had declines. APeJC increased the most in 2021, with a year-over-year increase of 43.7 percent. Spending increased by double digits in Canada, Central and Eastern Europe, the Middle East and Africa, and China. Western Europe grew in the low single digits, whereas Japan expanded in the high single digits. The US economy rose by 1.5 percent. Latin America saw a year-over-year drop.

Cloud infrastructure investment is predicted to expand in most areas by 2022, with the United States seeing the biggest growth at 27.8 percent. Only Central and Eastern Europe is predicted to see a decrease in spending in 2022, with spending expected to drop 21.7 percent year over year.

Over the forecast period of 2021-2026, IDC estimates expenditure on computing and storage cloud infrastructure will expand at a compound annual growth rate (CAGR) of 12.6 percent, reaching $133.7 billion in 2026 and accounting for 68.6 percent of total compute and storage infrastructure spend.

Shared cloud infrastructure will account for 72.0 percent of overall cloud spending, with a 13.4 percent compound annual growth rate. Dedicated cloud infrastructure spending will expand at a CAGR of 10.7 percent. Non-cloud infrastructure spending will grow at a 0.5 percent CAGR, reaching $61.2 billion in 2026. Service providers’ spending on compute and storage infrastructure is predicted to expand at an 11.7 percent compound annual growth rate (CAGR) to $130.6 billion in 2026.

Shared Cloud Vs. Dedicated Cloud

Shared cloud services – are built for a market, not a single organization, and are shared across unconnected enterprises and customers. They are available to a broadly unconstrained universe of prospective users. The shared cloud market encompasses a wide range of services aimed at extending or, in some cases, replacing IT infrastructure in corporate datacenters; these services are collectively referred to as public cloud services. Digital services such as media/content distribution, sharing and search, social networking, and e-commerce are all part of the shared cloud industry.

Dedicated cloud services – are shared within a single enterprise or an extended enterprise with access restrictions and resource dedication levels defined/controlled by the enterprise (and beyond the control available in public cloud offerings); they can be onsite or offsite; and they can be managed by a third-party or in-house staff. ‘Vendors (cloud service providers)’ are analogous to IT departments/shared service departments within enterprises/groups in dedicated cloud that is handled by in-house workers. The “service users” under this usage model, where standardized services are shared across the enterprise/group, include business departments, offices, and personnel.