Skip to main content

Hyperscale Cloud Providers Invest $16.9 Billion in 2016

Consumer demand for cloud-based services drive investment in data centers. Across the globe, the largest consumer cloud service providers continue to add more and more capabilities to expand their offerings, thereby making it very difficult for the remaining me-too providers to compete with them.

Moreover, the traditional information and communication technology (ICT) vendors often don't benefit from this ongoing infrastructure expansion, because the cloud providers prefer to invest in open technologies from low-cost 'white label' ODM commodity vendors. That's unlikely to change.

Hyperscale Cloud Market Development

The hyperscale or webscale cloud service providers -- including the seven largest (Super7) Alphabet, Amazon, Facebook, Microsoft, Alibaba, Baidu and Tencent -- believe they are best positioned to provide access to a variety of cloud services in a scalable and cost-effective way, and view their public cloud businesses as critical to their growth over the next five years.

"All of the Super 7 companies are aggressively building data center footprints globally and are baking in significantly more capacity than they currently need in anticipation of future data traffic growth," said Chris Antlitz, senior analyst at Technology Business Research (TBR).


However, despite the addition of extra capacity upfront, capex growth will remain robust through the next five years as workloads increasingly move to the public cloud and as the digital ecosystem flourishes worldwide.

Of the $16.9 billion in capex investment by the Super 7 on ICT equipment in 2016, TBR estimates around 75 percent was for data center infrastructure, with the balance of ICT capex spent primarily on optical transport, routers, switches, software and broadband access initiatives.

Hyperscale Cloud Vendor Growth Outlook

According to the TBR assessment, The Super 7 are investing heavily in data centers to support the internal operations of their core businesses, and also for their external cloud services businesses, which are growing much faster than their core digital businesses.

Some vendors are gaining traction with webscale companies, with revenues increasing and the scope of engagements widening. Generally speaking, vendors that align their portfolios and innovation road
maps with low-cost open-source hyperscale requirements stand to win the most business from webscale companies.

Popular posts from this blog

Trends Shaping the Global Smartphone Market

There is a pivotal shift within the global smartphone market. Recent data from IDC highlights a more cautious outlook for 2025, with projected worldwide smartphone shipments seeing a significantly reduced growth rate. This revised forecast underscores the intricate interplay of global economic factors and geopolitical dynamics on pervasive personal communication devices. IDC's latest update projects a mere 0.6 percent growth in worldwide smartphone shipments for 2025, a stark reduction from the earlier 2.3 percent expectation. Global Smartphone Market Development This recalibration is largely attributed to prevailing economic uncertainties, including inflationary pressures and rising unemployment, alongside the persistent specter of tariff volatility. Despite these global tensions, it's interesting to note that the United States and China are still identified as the primary drivers of this modest growth. China, a critical market, is forecast to achieve a 3 percent year-over-yea...