Power of the cloud builders: Who ate one-third of the $38bn data centre pie in Q3? AWS, Microsoft, Google 'n' pals

Old world vendors should club together, form new biz called 'Screwed by Cloud'

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Hyperscale operators accounted for a whopping third of the $38bn spent on data centre kit and software during the first nine months of 2019 – indicative of the buying power the largest cloud builders wield over legacy tech makers.

The rise of the cloud giants in just the past half-decade is staggering, according to a report by Synergy Research. For the corresponding periods (Q1-Q3) in 2014 and 2017, these companies – which include AWS, Microsoft and Google – represented 15 and 26 per cent of spending.

During those five years, the total data centre hardware and software market itself grew by 34 per cent, and the "vast majority" of that has been due to the money that cloud builders have lavished on their bit barns, analyst John Dinsdale told us.

We see a continued decline in the volume of servers being bought by enterprises...

"Throughout that period," he added, "enterprise spending on data centre hardware and software has grown just 6 per cent while hyperscale spending has increased threefold."

He said that on the one hand, the relentless growth of hyperscale cloud operators ensures there is continued demand for new data centres, and existing ones just get bigger – ballooning with kit and software that are on a "frequent refresh cycle".

Dinsdale continued:

On the other hand, we see a continued decline in the volume of servers being bought by enterprises. The impact of those declines is balanced by steady increases in server average selling prices, as IT operations demand ever-more sophisticated server configurations, but overall spending by enterprise remains almost flat. These trends will continue.

It is, therefore, small wonder that Intel is prioritising available chip production to the biggest providers of public clouds or the social media giants. Or that Nvidia, or Dell EMC or Arista and plenty of others note the ground-shaking impact that hyperscalers cloud builders can have on their sales dial.

According to Synergy's Q3 numbers, servers, OS, storage, networking and virtualization software made up 96 per cent of the $38bn spent in the quarter. ®

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