Cloud IT Spending to Edge Out Traditional Data Centers by 2020

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The IT solutions market for cloud providers has nowhere to go but up.

A new forecast from IDC predicts that cloud IT infrastructure spending on servers, storage and network switches will jump 18.2 percent this year to reach $44.2 billion. Public clouds will generate 61 percent of that amount and off-premises private clouds will account for nearly 15 percent.

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IDC research director Natalya Yezhkova, said that over the next few quarters, “growth in spending on cloud IT infrastructure will be driven by investments done by new hyperscale data centers opening across the globe and increasing activity of tier-two and regional service providers,” in a statement.

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Additionally, businesses are also growing more adept at floating their own private clouds, she said. “Another significant boost to overall spending on cloud IT infrastructure will be coming from on-premises private cloud deployments as end users continue gaining knowledge and experience in setting up and managing cloud IT within their own data centers.”

Despite a 3 percent decline in spending on non-cloud IT infrastructure during 2017, the segment will still command the majority (57 percent) of all revenues. By 2020, however, the tables will turn.

Investments in cloud equipment are going up across the board, predicted the analyst firm. In 2017, spending on Ethernet switches will increase 23.9 percent, followed closely by 23.7 percent growth in enterprise storage. Server trail with a still-healthy improvement of 13.6 percent.

Combined, the public and private data center infrastructure segments will reach a major tipping point in 2020, accounting for nearly 53 percent of the market, compared to just over 47 percent for traditional data center gear. Public cloud operators and private cloud environments will drive $48.1 billion in IT infrastructure sales by that year.

Indeed, the cloud computing market is growing by leaps and bounds.

A recent analysis of the market by Synergy Research revealed that public and private cloud providers are within reaching $150 billion in annual revenues. It’s a market dominated by the likes of Amazon Web Services, Microsoft Azure, IBM, Rackspace and Salesforce.

“Cloud usage had already entered the mainstream and now cloud is starting to dominate IT markets – and what’s more high growth rates will persist for many more years,” noted Synergy Research chief analyst and research director John Dinsdale.

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