WW Market on Spending on Compute and Storage Cloud Infrastructure Products at $23.9 Billion in 3Q22

According to the International Data Corporation Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 24.7% year over year in 3Q22 to $23.9 billion.

Spending on cloud infrastructure continues to outgrow the non-cloud segment although the latter had strong growth in 3Q22 as well, increasing at 16.5% Y/Y to $16.8 billion. The market continues to benefit from high demand and large backlogs, coupled with an improving infrastructure supply chain.

Spending on shared cloud infrastructure reached $16.8 billion in the quarter, increasing 24.4% compared to a year ago. The analyst firm expects to see continuous strong demand for shared cloud infrastructure with spending expected to surpass non-cloud infrastructure spending in 2023. The dedicated cloud infrastructure segment grew 25.3% Y/Y in 3Q22 to $7.1 billion. Of the total dedicated cloud infrastructure, 45.2% was deployed on customer premises.

For the full year 2022, cloud infrastructure spending will grow 19.6% Y/Y to $88.1 billion – a noticeable increase from 8.6% annual growth in 2021. Non-cloud infrastructure is expected to grow 10.7% to $64.7 billion. Shared cloud infrastructure is expected to grow 19.0% Y/Y to $60.9 billion for 2022 while spending on dedicated cloud infrastructure is expected to grow 21.2% to $27.3 billion for 2022.

IDC tracks various categories of service providers and how much compute and storage infrastructure these service providers purchase, including both cloud and non-cloud infrastructure. The service provider category includes cloud service providers, digital service providers, communications service providers, and MSPs. In 3Q22, service providers as a group spent $23.9 billion on compute and storage infrastructure, up 22.5% from the prior year. This spending accounted for 58.7% of the total market. Non-service providers (e.g., enterprises, government, etc.) increased their spending at a similarly high rate, 19.3% Y/Y. Compute and storage spending by service providers will reach $87.8 billion in 2022, growing at 17.5% Y/Y.

On a geographic basis, Y/Y spending on cloud infrastructure in 3Q22 increased in all regions except Central and Eastern Europe (CEE), which is impacted by the Russia-Ukraine war. Spending in CEE declined 35.1% Y/Y in the quarter. The Middle East and Africa (MEA), USA, and Western Europe grew the most at 65.8%, 32.1%, and 31.3% Y/Y, respectively. All other regions demonstrated growth in the teens and twenties percentage range. For 2022, cloud infrastructure spending is expected to grow in all regions except CEE, with four regions – AsiaPac (excluding Japan and China), MEA, USA, and Western Europe – expecting to post annual growth in the 20-35% range.

Long term, IDC predicts spending on cloud infrastructure to have a CAGR of 12.9% over the 2021-2026 forecast period, reaching $135.1 billion in 2026 and accounting for 67.3% of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 72.3% of the total cloud amount, growing at a 13.8% CAGR. Spending on dedicated cloud infrastructure will grow at a CAGR of 10.7% to $37.4 billion. Spending on non-cloud infrastructure will have a CAGR of 2.3%, reaching $65.6 billion in 2026. Spending by service providers on compute and storage infrastructure is expected to grow at a CAGR of 12.1%, reaching $131.9 billion in 2026.

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.

Shared 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 shared cloud market includes a variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters; these services in total are called public cloud services. The shared cloud market also includes digital services such as media/content distribution, sharing and search, social media, and e-commerce.

Dedicated 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 dedicated 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.