According to a report by International Data Corporation (IDC), spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, has increased 36.9 per cent year over year (YoY) in the first quarter (Q1) of 2024 to $33 billion.
The report stated that spending on cloud infrastructure continues to outgrow the non-cloud segment with the latter growing by 5.7 per cent in Q1 2024 to $13.9 billion. Meanwhile, the cloud infrastructure segment experienced slower growth in unit demand of 11.4 per cent, due to the continued increase in average selling prices (ASPs) mostly related to higher-than-usual GPU server shipments.
Commenting on the report Juan Pablo Seminara, research director, worldwide enterprise infrastructure tracker, IDC, said, “Cloud infrastructure spending growth continues being driven by the explosion of AI-related investments, which not only impact servers but also started to have positive influence on enterprise storage as well. Even though some caution still remains on the socio-political side, it has become clear that AI investment plans are not slowing down in 2024 and will continue growing at a high rate this year and beyond. Additionally, the improvement in economic prospects contributes to a very positive spending outlook for 2024 and 2025 where cloud-based spending will increase at a double-digit pace.”
The report highlighted that spending on shared (public) cloud infrastructure reached $26.3 billion in the quarter, increasing 43.9 per cent compared to a year ago. The shared cloud infrastructure category continues to hold the largest share of spending compared to dedicated (private) cloud deployments and non-cloud spending. In Q1 2024, shared cloud accounted for 56.1 per cent of total infrastructure spending. In addition, the dedicated cloud infrastructure segment saw lower growth of 15.3 per cent YoY in Q1 2024 to $6.7 billion.
As per the report, it is forecasted that cloud infrastructure spending will grow 26.1 per cent compared to 2023 to $138.3 billion. Meanwhile, non-cloud infrastructure is forecasted to grow 8.4 per cent to $64.8 billion, and shared cloud infrastructure is expected to grow 30.4 per cent year over year to $108.3 billion for the full year. Further, spending on dedicated cloud infrastructure is also expected to have double-digit growth in 2024 at 12.8 per cent, reaching $30.0 billion for the full year. The subdued growth forecast for non-cloud infrastructure at 8.4 per cent in 2024 reflects that even though most of the growth will come from cloud spending, general non-cloud dedicated systems are set to recover in 2024.
According to the report, IDC’s service provider category includes cloud service providers, digital service providers, communications service providers, hyperscalers, and managed service providers. In Q1 2024, service providers as a group spent $32.2 billion on compute and storage infrastructure, up 37.9 per cent from the prior year. This spending accounted for 68.7 per cent of the total market. Non-service providers (for example, enterprises, government, etc.) also increased their spending to $14.7 billion, growing 5.8 per cent year over year. IDC expects compute and storage spending by service providers to reach $132.2 billion in 2024, growing at 26.2 per cent YoY.
Furthermore, the report noted that on a geographic basis, YoY spending on cloud infrastructure in 1 Q24 showed very positive results in general, where only Latin America presented a decline of 2.8 per cent, while Western Europe and Middle East and Africa were the only regions that grew by single digits at 4 per cent and 5.3 per cent, respectively. These results were largely affected by political tensions that delayed investment plans. The regions that showed solid double-digit growth were Asia/Pacific (excluding Japan and China), Japan, Central and Eastern Europe, USA, China (PRC), and Canada, where cloud spending grew at 85.4 per cent, 53.1 per cent, 42.6 per cent, 37 per cent, 33.7 per cent, and 16.1 per cent YoY, respectively. Most of the growth is related to large high-performance computing (HPC) and AI-based large projects, some of which were delayed due to supply issues in the past.
Moreover, long term, the report predicted spending on cloud infrastructure will have a compound annual growth rate (CAGR) of 14.3 per cent over the 2023-2028 forecast period, reaching $213.7 billion in 2028 and accounting for 75 per cent of total compute and storage infrastructure spend. Shared cloud infrastructure spending will account for 77.5 per cent of the total cloud spending in 2028, growing at a 14.8 per cent CAGR and reaching $165.6 billion, while spending on dedicated cloud infrastructure will grow at a CAGR of 12.6 per cent to $48.2 billion. Spending on non-cloud infrastructure will also rebound with a 3.6 per cent CAGR, reaching $71.4 billion in 2028. In addition, spending by service providers on compute and storage infrastructure is expected to grow at a 13.8 per cent CAGR, reaching $199.9 billion in 2028.
