Cloud IT Infrastructure Accounts for Nearly 40% of All IT Spending

The cloud’s insatiable appetite for faster servers, bigger storage and high-performance networking, is lifting the fortunes of many technology vendors. In fact, sales of cloud IT infrastructure now represents nearly two fifths of all IT spending, according to technology research firm IDC.

During the first quarter (Q1) of 2017, vendors of cloud IT infrastructure – a category that includes servers, storage systems and Ethernet switching equipment – generated $8 billion in revenue, a 14.9 percent year-over-year increase. As a share of all IT spending worldwide, the category accounts for 39 percent compared to 33.9 percent in Q1 2016.

This year provided a strong start for vendors that cater to public and private cloud providers, noted IDC research director Natalya Yezhkova.

“After a weak performance during 2016, storage purchases for cloud IT environments had a strong rebound in the first quarter, driving the overall growth in this segment,” said Yezhkova in a statement. “Overall, the first quarter set a strong beginning of the year for the cloud IT infrastructure market. With positive dynamics in purchasing activity by hyperscalers across all technology segments we expect a strong year ahead for the fastest growing public cloud segment.”

Sales to public cloud providers jumped 21.7 percent on an annual basis to $4.8 billion in Q1 2017. Private cloud revenues clocked in at $3.1 billion, a six percent increase. Meanwhile, non-cloud infrastructure sales dipped eight percent.

Dell is the cloud IT infrastructure leader with 16.2 percent of the market and nearly $1.3 billion in revenue last quarter. Hewlett Packard Enterprise (HPE) and its New H3 Group joint venture are a close second with $1.1 billion in revenue and 14 percent of the market. Third place Cisco generated sales of $902 million in Q1, enough for an 11.3-percent share of the market.

Original design manufacturers (ODMs) that sell directly to cloud providers experienced massive revenue growth last quarter. Collectively, ODMs sold nearly $2 billion in cloud IT infrastructure, a 64.1-percent year-over-year increase.

Public cloud providers flocked to data storage systems, increasing sales by 49.5 percent in Q1 2017 compared to the same year-ago quarter, followed by Ethernet switches (22.7 percent) and servers (8.7 percent). On the private cloud front, the Ethernet switch segment experienced the most growth (15.5 percent), followed by storage (10 percent) and servers (2.1 percent).