According to a report by IDC, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared information technology (IT) environments has increased 61.5 per cent year over year (YoY) in the second quarter of 2024 (Q2 2024) to $ 42.9 billion.
The report noted that the spending on cloud infrastructure continues to outgrow the non-cloud segment with the latter growing by 41.4 per cent in Q2 2024 to $19.4 billion. The cloud infrastructure segment experienced lower growth in unit demand at 17.7 per cent, due to a continued increase in average selling prices (ASPs), mostly related to the exponential increase of GPU server shipments.
Commenting on the news, Juan Pablo Seminara, research director, Worldwide Enterprise Infrastructure Trackers, said, “Cloud infrastructure spending growth continues to be driven by accelerated artificial intelligence (AI)-related investments, which especially impacted servers but also triggered enterprise storage spending. Different surveys conducted by IDC in 2024 show how AI investment plans have been scaling up and driving investment priorities for almost every region. Hyperscalers, digital service providers, and major cloud service providers are the ones that keep pushing the growth and that will continue to have a positive impact on the market during 2024 and 2025. And the improved economic prospects will help to extend the positive mood even further.”
It added that spending on shared cloud infrastructure reached $35.3 billion in the quarter, increasing 74.9 per cent compared to a year ago. The shared cloud infrastructure category continues capturing the largest share of spending compared to dedicated deployments and non-cloud spending, with shared cloud accounting for 56.6 per cent of the total infrastructure spending in Q2 24. The dedicated cloud infrastructure segment presented lower growth of 19.2 per cent year over year in Q2 24 to $7.6 billion.
For 2024, the report predicted that cloud infrastructure spending is expected to grow 48.8 per cent compared to 2023 to $164.0 billion. Non-cloud infrastructure is expected to grow 11.7 per cent to $67.5 billion, meanwhile shared cloud infrastructure is expected to grow 57.9 per cent YoY to $131.9 billion for the full year. Spending on dedicated cloud infrastructure is also expected to have double-digit growth in 2024 at 20.4 per cent reaching $32.1 billion for the full year. The subdued growth forecast for non-cloud infrastructure at 11.7 per cent in 2024 reflects that even though most of the growth will come from cloud spending, general non-cloud dedicated systems are consolidating their recovery this year.
The report added that in Q2 2024, service providers as a group spent $ 41.8 billion on compute and storage infrastructure, up 64.2 per cent from the prior year. This spending accounted for 67.2 per cent of the total market. Non-service providers (e.g., enterprises, government, etc.) also increased their spending to $20.5 billion growing 38.2 per cent year over year. The report predicted that compute and storage spending by service providers will reach $157.8 billion in 2024, growing at 49.4 per cent YoY.
As per the report, on a geographic basis, YoY spending on cloud infrastructure in 2Q24 showed very positive results across all regions where the fastest growing regions were Asia/Pacific (excluding Japan and China), Japan, USA, and Canada with 110.7 per cent, 98.1 per cent, 72.1 per cent and 53.8 per cent YoY growth respectively.
The report forecasted that in long term, spending on cloud infrastructure will have a compound annual growth rate (CAGR) of 18.1 per cent over the 2023-2028 forecast period, reaching $253 billion in 2028 and accounting for 76.4 per cent of total compute and storage infrastructure spend. In addition, shared cloud infrastructure spending will account for 78.6 per cent of the total cloud spending in 2028, growing at an 18.9 per cent CAGR and reaching $198.8 billion. Spending on dedicated cloud infrastructure will grow at a CAGR of 15.3 per cent to $54.3 billion. Further, spending on non-cloud infrastructure will also rebound with a 5.3 per cent CAGR, reaching $78.3 billion in 2028, and spending by service providers on compute and storage infrastructure is expected to grow at a 17.1 per cent CAGR, reaching $233.0 billion in 2028.
