By now, it has been fairly well established that the pandemic has largely been a boon to cloud providers over the past year, but new research shows just what a positive influence it has been, with hyperscalers dramatically ramping up their data centre investments.
Hyperscale cloud operator capital expenditure (capex) in the first quarter of 2021 was up by 31 per cent from the prior year, reaching US$38 billion, according to new data from industry analyst firm Synergy Research Group.
The latest quarter brings the total capex spend over the past four quarters to over US$149 billion, compared to US$121 billion in the previous four quarters.
The latest figures by Synergy are based on analysis of the capex and data centre footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in the areas of infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), software-as-a-service (SaaS), search, social networking and e-commerce.
Much of the hyperscale capex captured in Synergy’s figures goes towards building, expanding and equipping large data centres, which grew in number to 625 at the end of the first quarter, according to the analyst firm.
On average, data centre spend accounted for well over half of all hyperscale operator capex, Synergy said, although it also conceded that the data centre share of capex does vary greatly from quarter to quarter and from one operator to another.
According to Synergy, the top four hyperscale spenders over the past four quarters were Amazon Web Services (AWS), Microsoft, Google and Facebook. The capex budgets of these four players alone far outstripped other hyperscale operators in the market. The next biggest spenders were Apple, Alibaba and Tencent.
According to Synergy Research Group chief analyst John Dinsdale the pandemic proved to be more of a stimulus to growth for hyperscale operators rather than a barrier – and the surge in spending is far from over.
“Over the last four quarters we continued to see extremely strong growth in revenue, capex and data centre spending,” Dinsdale said. “It is interesting to compare their fortunes with other types of major service provider around the world.
“As hyperscale capex levels keep on setting new records, it is in stark contrast with telcos, whose capex has essentially been totally flat for five years now, mirroring their inability to grow overall revenues.
“Given the ongoing growth in service revenues for hyperscalers and the ever-increasing need for a larger global data centre footprint, we are forecasting continued double-digit growth in hyperscale capex for several years to come,” he said.
In aggregate, the companies included in Synergy’s research generated revenues of over US$1.7 trillion over the last four quarters, having grown 24 per cent from the preceding four quarters.
Unsurprisingly, capex growth at Amazon (AWS) and Microsoft – the two clear leaders among the global hyperscale ranks – was particularly strong, while Google spending dropped off a little and Apple’s capex bounced back in the last two quarters.
Meanwhile, Facebook, Alibaba and Tencent all continued to ramp up their spending. Below the top seven, other leading hyperscale spenders included IBM, NTT, Oracle, JD.com, Twitter and Baidu, Synergy research said.
In March, analysis by business consulting firm Frost & Sullivan revealed that global investment in data centre infrastructure was expected to surge past US$26 billion by 2025, driven by rampant data creation and pent-up demand.
Despite many data centre companies reducing construction activities during the initial onset of COVID-19, Frost & Sullivan anticipated that the industry would witness significant growth in 2021 due to the pent-up demand.
Total investment in data centre infrastructure solutions (DCIS) was expected to reach US$26.15 billion by 2025, up from US$16.73 billion in 2019, equating to a compound annual growth rate (CAGR) of 7.7 per cent.Internet Explorer Channel Network