The surge in demand for shared cloud infrastructure will enable the domain to attract a greater capex than the whole of non-cloud infrastructure investment in 2022, says a recent IDC report that evaluated capex by both service providers and enterprises.
The total cloud infrastructure spending in Q1 2022 increased 17.2% year-over-year to $18.3 billion, divided among shared ($12.5 billion) + dedicated cloud infra ($5.9 billion). IDC expects cloud infrastructure spending to surge even further for the entire year at 22% YoY to $90.2 billion (shared cloud: $63.9 billion + dedicated cloud: $26.3 billion).
Comparatively, non-cloud infrastructure spending, which grew 9.8% YOY to $14.8 billion in Q1 2022, is expected to grow only 1.8% to $60.7 billion in 2022. So by the end of this year, the shared cloud infrastructure will attract higher capex than that on the entirety of non-cloud infra.
Dedicated cloud infrastructure is designed for specific applications of companies and usually entails a service agreement. It is less affordable than shared infrastructure, which, as the name suggests, is designed to address small and medium businesses’ relatively simple cloud needs.
The surge in spending on all fronts, including cloud or non-cloud, indicates higher demand. However, IDC pointed out that inflation may have been shaping IT infrastructure demand by extension and spending.
“The increased forecast for both segments is partially driven by inflationary pressure and expectations of higher systems prices during 2022 as well as improvements in the supply chain in the second half of the year,” IDC noted. An inflated price means customers get less for the same amount, leading them to spend a little bit more to fulfill their computing needs.
Last month, the Dell’Oro Group said something similar in their assessment of industry-wide capex on the cloud data center. In the 1Q 2022 Data Center IT Capex Quarterly Report, Dell’Oro Group research director Baron Fung said:
“Data center capex grew double-digits year over year in (Q1) 2022, despite persistent supply chain constraints. We anticipate further upside in data center capex later this year, as the (top four) cloud service providers expand their services and as server memory prices trend higher.”
