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Cloud IT Infrastructure Revenue Reaches $8B in 1Q17

As enterprise CIOs and CTOs rebalance their IT budgets to accommodate new digital business transformation projects, the shift in infrastructure investment continues to evolve. Demand for hybrid cloud scenarios are apparently driving much of the new IT investment.

IT vendor revenue from sales of infrastructure products -- such as server, storage, and Ethernet switch -- for cloud computing, including public and private cloud, grew 14.9 percent year-over-year in the first quarter of 2017 (1Q17) reaching $8 billion, according to the latest worldwide market study by International Data Corporation (IDC).

Cloud IT infrastructure sales as a share of overall worldwide IT spending climbed to 39 percent in 1Q17 -- that's considered a significant increase from the 33.9 percent a year ago.

Cloud IT Infrastructure Market Development

Revenue from infrastructure sales to private cloud grew by 6 percent to $3.1 billion, and to public cloud by 21.7 percent to $4.8 billion. In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased by 8 percent year-over-year in the first quarter of 2017.

Private cloud infrastructure growth was led by Ethernet switch at 15.5 percent year-over-year growth, followed by storage (excluding double counting with servers) at 10 percent and server at 2.1 percent.

Public cloud growth was led by storage, which after heavy declines in 1Q16 grew 49.5 percent year-over-year in 1Q17, followed by Ethernet switch at 22.7 percent and server at 8.7 percent. In traditional IT deployments, server declined the most (9.3 percent year-over-year), with Ethernet switch and storage declining 4.4 percent and 6.1 percent, respectively.

"After a weak performance during 2016, storage purchases for cloud IT environments had a strong rebound in the first quarter, driving the overall growth in this segment," said Natalya Yezhkova, research director at IDC.

Overall, the first quarter set a strong beginning of the year for the cloud IT infrastructure market. With positive dynamics in purchasing activity by hyperscale service providers across all technology segments, IDC expects a strong year ahead for the fastest growing public cloud segment.

And, according to the IDC assessment, as end users continue to embrace the benefits of private cloud infrastructures, spending in this segment will also expand.

Cloud IT Infrastructure Regional Growth

From a regional perspective, vendor revenue from cloud IT infrastructure sales grew fastest in Canada at 59.1 percent year-over-year in 1Q17 off a small base (overall cloud IT infrastructure market in Canada was just under $100 million in 1Q17).

This was growth followed by Asia-Pacific (excluding Japan) at 18.7 percent, Japan at 15.3 percent, the United States at 15.1 percent, Middle East & Africa at 13.2 percent, Western Europe at 8.9 percent, Latin America at 7.8 percent, and the Central and Eastern Europe at 7.2 percent.

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