IT Landscape Reshaped by Hyperscale Cloud Demand

Cloud data center operators are investing billions of dollars to meet increased demand, disrupting traditional IT spending patterns, reveals Synergy Research Group.


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Spending on cloud infrastructure services is growing at a rate of 50 percent per year, prompting hyperscale data center operators to pour billions of dollars into expanding their global footprints, according to Synergy Research Group. And the major players are showing no signs of slowing down.

With approximately 110 data centers spread across 20 countries, the top four cloud providers will grow their total data center count by 20 percent, or 22 new facilities, in the next 12 months, predicts Synergy. Unsurprisingly, those cloud computing heavyweights are Amazon Web Services [AWS], Microsoft, IBM and Google.

Increased cloud demand has also helped fuel over $25 billion in data center merger and acquisition activity in recent years, led by Equinix, Digital Realty, NTT and IBM.

"Building and managing data centers is a hugely expensive and complex process that an increasing numbers of enterprises are trying to minimize or exit altogether," said John Dinsdale, chief analyst and research director at Synergy Research Group, told Datamation in an email. "The investment numbers involved in creating a global footprint of data centers is now mind-boggling and this is leading to big changes in the nature and structure of the IT industry."

Billion-dollar deals aside, the IT industry is undergoing major changes.

Synergy found that while spending on service provider data centers is skyrocketing, enterprise data center equipment purchasing is static. Able to supply servers to hyperscale data center operators in bulk, original design manufacturers (ODMs) are clawing market share away from traditional vendors, observed the research firm. Synergy also noticed that huge capital outlays and the focus required to successfully run a cloud service business are causing telecommunications companies to rethink their data center strategies.

Essentially, the cloud casts a huge shadow over the enterprise IT market.

"This is a time of unprecedented change in the IT industry," Dinsdale said in a Nov. 19 statement. "End users are getting access to flexible and agile IT services that they could only dream about a few years ago and CIOs are pulling back from buying and managing their own data centers."

Major IT companies are also adjusting to the changes in their corporate identities.

"Companies like AWS and Microsoft are now major players in enterprise IT; IBM is totally reinventing itself; companies like Equinix and NTT are amassing huge data center footprints; while HP and Cisco are aggressively growing their cloud technology business units," stated Dinsdale. "We do not expect the rate of change to lessen over the coming years."

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

Tags: cloud computing, IT, hyperscale

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