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Strong Spending on Cloud IT Infrastructure in 2016: $37 Billion – IDC

Up 15.5% despite first quarter slowdown

According International Data Corporation‘s Worldwide Quarterly Cloud IT Infrastructure Tracker, total spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments will increase by 15.5% in 2016 to reach $37.1 billion.

WW Cloud IT infrastructure market forecast by deployment type – 2015-2020
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This amount excludes double counting between storage and servers. In comparison, spending on enterprise IT infrastructure deployed in traditional, non-cloud, environments will decline by 4.4% in 2016, but will still account for the largest share, 63.4%, of end user spending.

Spending on private cloud IT infrastructure will grow by 10.3% year over year to $13.8 billion with more than 60% of this amount contributed by on-premises private cloud environments. Spending on public cloud IT infrastructure will increase by 18.8% in 2016 to $23.3 billion.

Spending on IT infrastructure products for cloud environments will grow 15.5% in 2016 to $37.1 billion, says IDC.

All regions are expected to increase spending on cloud IT infrastructure in 2016 with investments in public cloud growing at a faster rate than investments in private cloud IT infrastructure. For cloud environments combined, spending on Ethernet switches will be growing at the highest rate, 39.5%, while spending on server and storage will grow at 11.4% and 14.2%, respectively.

For the long-term forecast, IDC expects that spending on IT infrastructure for cloud environments will grow at a 13.1% CAGR to $59.5 billion in 2020. This will represent 48.7% of the total spending on enterprise IT infrastructure. Spending on non-cloud IT infrastructure will decline at 1.4% CAGR during the same period. Within the cloud segment, spending on public and private cloud IT infrastructure will grow at 18.8% and 10.3% CAGR respectively. In 2020, IDC expects public cloud service providers (CSPs) will spend $38.4 billion on IT infrastructure for delivering services, while spending on private cloud IT infrastructure will reach $21.1 billion.

Despite weakness in hyperscale CSP demand for IT infrastructure products in the first quarter, we expect spending on public cloud to increase in the second half of the year,” said Natalya Yezhkova, research director, storage systems. “Overall, we will continue to see steady growth in demand for public cloud services and, as a result, underlying spending on IT infrastructure by CSPs. The economic and financial volatility we see in some regions will push demand further as increasing sophistication of public cloud offerings allows organizations to fulfill their needs across a growing variety of IT domains while OPEX-oriented pricing models provide some relief to tightening IT budgets.”

Taxonomy Notes:
IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service. Public cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. The public cloud market includes variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters. It also includes content services delivered by a group of suppliers IDC calls Value Added Content Providers (VACP). Private cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In private cloud that is managed by in-house staff, ‘vendors (cloud service providers)’ are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the ‘service users.’

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