Vendor revenue from global sales of IT infrastructure products (servers , enterprise storage solutions, and Ethernet switches) for cloud environments – including public and private cloud, increased 9.4% year over year in the third quarter of 2020 (Q3 2020), according to IDC. Investments in traditional, non-cloud, IT infrastructure declined -8.3% year over year in the third quarter of 2020.
According to IDC, these growth rates show the market response to major adjustments in business, educational, and societal activities caused by the COVID-19 pandemic and the role IT infrastructure plays in these adjustments.
Across the world, there were massive shifts to online tools in all aspects of human life, including collaboration, virtual business events, entertainment, shopping, telemedicine, and education. Cloud environments, and particularly public cloud, were a key enabler of this shift, says IDC.
Spending on public cloud IT infrastructure increased 13.1% year over year in the third quarter of 2020, reaching $13.3 billion. During the previous quarter, spending on public cloud IT infrastructure exceeded non-cloud IT infrastructure spending for the first time ever, but non-cloud IT infrastructure spending was back on top in the third quarter at $13.7 billion.
IDC expects public cloud IT infrastructure spending to surpass non-cloud IT infrastructure spending again in the near future and expand its lead going forward. Spending on private cloud infrastructure increased 0.6% year over year in the third quarter of 2020 to $5.0 billion with on-premises private clouds accounting for 63.2% of this amount.
Dominance of Cloud
IDC believes the hardware infrastructure market has reached a tipping point. Cloud environments will continue to account for an increasingly greater share of overall spending. With only one quarter remaining in 2020 and the market stabilizing after the initial COVID-19 market shock, IDC has increased its forecast slightly for cloud IT infrastructure spending for the full year 2020, expecting 11.1% growth to $74.1 billion.
IDC reduced its forecast for non-cloud infrastructure, expecting a decline of -11.4% to $60.2 billion. Public cloud IT infrastructure is expected to grow by 16.7% year over year to $52.7 billion for the full year. Spending on private cloud infrastructure is expected to decline -0.5% to $21.3 billion for the full year.
As of 2019, the dominance of cloud IT environments over non-cloud already existed for compute platforms and Ethernet switches while the majority of newly shipped storage platforms were still residing in non-cloud environments. Starting in 2020, with increased investments from public cloud providers on storage platforms, this shift will remain persistent across all three technology domains. Within cloud deployment environments in 2020, compute platforms will remain the largest segment (49.1%) of spending, growing at 2.3% to $36.4 billion. Storage platforms will be the fastest growing segment with spending increasing 27.4% to $29.2 billion, while the Ethernet switch segment will grow 4.0% year over year to $8.5 billion.
Inspur, Huawei, Lenovo, Cisco
Spending on cloud IT infrastructure increased across most regions in the third quarter of 2020, with the highest annual growth rates in Canada (32.8%), China (29.4%), and Latin America (23.4%). Growth in the United States was 4.7%. Japan and Western Europe declined by -6.7% and -3.4%, respectively. In all regions except Canada and Japan, growth in public cloud infrastructure exceeded growth in private cloud IT.
At the vendor level, the results were mixed. Inspur, Huawei, and Lenovo had double-digit year-over-year growth while most other major vendors, including the ODM Direct group of vendors, had single-digit growth. Cisco was the only major vendor with a year-over-year decline, according to IDC.
IDC’s Worldwide Quarterly Cloud IT Infrastructure Tracker is designed to provide clients with a better understanding of what portion of the server, disk storage systems, and networking hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors’ revenue by the hardware technology market into public and private cloud environments for historical data and provides a five-year forecast by the technology market.