Hyperscalers, with their insatiable appetite for putting everything into the cloud, are expected to drive global data centre spending to new highs.
This is according to a forecast published by analyst firm Dell’Oro, which predicts that data centre capex will hit $350 billion by 2026. In response to questions from Telecoms.com, Dell’Oro guided that 2021 capex is $218 billion, with 4Q21 data still at the ‘estimated’ stage. It also noted that its data centre capex forecasts have been adjusted upwards in general, due to increased demand from hyperscalers, inflationary pressures, and increased adoption of accelerated computing.
“The hyperscale cloud service providers will account for an increasing portion of the total market, as they invest to expand their network of data centres, increase cloud capacity, and deploy AI infrastructure to enable new applications such as the metaverse,” said Dell’Oro research director Baron Fung, in a statement.
Hyperscalers are already reaping the benefits of their investments as this week, Google parent Alphabet reported a 32 percent year-on-year (YoY) jump in fourth quarter revenue, driven in part by strong growth in Google Cloud. That followed Microsoft, which last week reported a 20 percent year-on-year increase in revenue, also driven by its various cloud activities. At the time of writing, Amazon had yet to publish its Q4 figures, but in Q3, Amazon Web Services (AWS) reported a 39 percent YoY increase in revenue.
In December, Dell’Oro predicted that hyperscale cloud service providers will increase their combined spending on data centres and AI infrastructure by 30 percent this year. Traditional hosted storage and applications are not the only driving force behind data centre spending though.
“We also anticipate incremental growth as data centre infrastructure become more distributed, as the cloud and telecom service providers and enterprises launch new services at the edge of the network,” Fung said.
Indeed, Dell’Oro expects edge investments to account for 8 percent of total data centre infrastructure spending by 2026. That translates to a figure of $28 billion. How does that fit into the broader edge computing market? Well, last month IDC predicted that overall edge market spending – which covers software, hardware and services – will reach $274 billion by 2025. It suggests – provided both these forecasts are vaguely comparable – that in five or so years, data centres will account for approximately 10 percent of total edge spending.