According to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud infrastructure, including dedicated and shared environments, increased 6.6% year over year in the third quarter of 2021 (3Q21) to $18.6 billion. This increase resumes the trend of net positive year-over-year spending growth per quarter, which saw a pause in the second quarter of 2021 when spend decreased 1.9%. This follows seven quarters of year-over-year spending growth that started in 3Q19, highlighted by 38.4% growth in 2Q20 as the first global pandemic wave led to business and country closures causing a spike in investments in cloud services and infrastructure. Investments in non-cloud infrastructure increased 7.3% year over year in 3Q21 to $14.6 billion, the third consecutive quarter to see an increase in year-over-year spend after a period of declining spending that started in 2Q19.
Spending on shared cloud infrastructure reached $13 billion, an increase of 8.6% compared to 3Q20, and a 6.6% increase from the previous quarter. This continues a trend of year-over-year growth since 4Q19, interrupted in the previous quarter (2Q21) by comparison to an exceptionally strong 2Q20 that saw spending increase 55.1% driven by the spike in demand for public cloud services in the first months of the pandemic. IDC expects to see continuously strong demand for shared cloud infrastructure with spending surpassing non-cloud infrastructure spending in 2022. Spending on dedicated cloud infrastructure increased 13.4% year over year in 3Q21 to $5.6 billion, the highest year-over-year increase since 1Q19 with 45.5% of this amount deployed on customer premises. IDC expects that spending on cloud environments will continue to outpace non-cloud spending throughout its forecast.
For the full year 2021, IDC forecasts cloud infrastructure spending to grow 8.3% compared to 2020 to $71.8 billion, while non-cloud infrastructure is expected to grow 1.9% to $58.4 billion after two years of declines. Shared cloud infrastructure is expected to grow by 7.2% year over year to $49.7 billion for the full year. Spending on dedicated cloud infrastructure is expected to grow 10.7% to $22.2 billion for the full year.
As part of the Tracker, IDC tracks various categories of service providers and how much compute and storage infrastructure these service providers purchase, including both cloud and non-cloud infrastructure. The service provider category includes cloud service providers, digital service providers, communications service providers, and managed service providers. In 3Q21, service providers as a group spent $18.9 billion on compute and storage infrastructure, up 10.2% from 3Q20 and up 6.7% from 2Q21. This spending accounted for 57.1% of the total compute and storage infrastructure market. IDC expects compute and storage spending by service providers to reach $72.6 billion for 2021, growing 7.4% compared to 2020.
At the regional level, year-over-year spending on cloud infrastructure increased with the level of growth varying across regions. The Asia/Pacific subregions, Canada, and the Europe subregions saw double-digit growth in spending, while Latin America, the Middle East and Africa, and the United States saw more moderate single-digit increases in spending. The Asia/Pacific region (excluding Japan and China) showed the strongest year-over-year increase in cloud infrastructure spending in 3Q21 at 64.3% while the U.S. recorded the weakest growth at 1.1%. For the full year, spending on cloud infrastructure is expected to increase across all regions compared to 2020, particularly in Asia/Pacific regions (excluding Japan), Canada, and Central & Eastern Europe. The United States is expected to show only marginal year-over-year growth of 0.4%.
Long term, IDC expects 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 67.0% of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 70.9% of this amount, growing at a 12.7% CAGR. Spending on dedicated cloud infrastructure will grow at a CAGR of 11.5%. Spending on non-cloud infrastructure will rebound in 2021 but will flatten out at a CAGR of 0.5%, reaching $58.6 billion in 2025. Spending by service providers on compute and storage infrastructure is expected to grow at a 1.3% CAGR, reaching $115.4 billion in 2025.
A graphic illustrating IDC’s 2020-2025 forecast for worldwide enterprise infrastructure spending by type (shared cloud, dedicated cloud, and non-cloud) is available by viewing this press release on IDC.com.
IDC’s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment is designed to provide clients with a better understanding of what portion of the compute and storage hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors’ revenue into shared and dedicated cloud environments for historical data and provides a five-year forecast. This Tracker is part of the Worldwide Quarterly Enterprise Infrastructure Tracker, which provides a holistic total addressable market view of the four key enabling infrastructure technologies for the datacenter (servers, external enterprise storage systems, and purpose-built appliances: HCI and PBBA).
Taxonomy Notes
IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service.
Shared cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. The shared cloud market includes a variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters; these services in total are called public cloud services. The shared cloud market also includes digital services such as media/content distribution, sharing and search, social media, and e-commerce.
Dedicated cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In dedicated cloud that is managed by in-house staff, “vendors (cloud service providers)” are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the “service users.”
For more information about IDC’s Quarterly Cloud IT Infrastructure Tracker, please contact Lidice Fernandez at lfernandez@idc.com.
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