News & Analysis

Has Cloud Infrastructure Finally Arrived? 

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Over the past several years, providers and sellers of cloud-based infrastructure have shouted themselves hoarse about how the service would one day leapfrog over physical forms that have traditionally been how internet technologies set themselves up. A new report now suggests that the shift could have actually happened now. 

A report from IDC says that the Covid-19 pandemic saw a major shift in the manner that both consumers and businesses used online services. And due to this change, the second quarter of 2020 saw a tipping point in terms of cloud sales exceeding non-cloud infrastructure for the first time ever. 

The survey titled Worldwide Quarterly Cloud IT Infrastructure Tracker, it came out that vendor revenue from sale of IT infrastructure products for cloud environments such as servers, storage for enterprise and Ethernet switches saw a robust 34.4% growth year on year during April-June of this year. 

What could be sweet music to these service providers is also the fact that around the same time period, investments in traditional, non-cloud infrastructure went down by 8.7% over the period as compared to the same duration last year. The shift was global where online tools took precedence for both consumers as well as enterprises during the pandemic. 

And IDC believes that this is what led to the spike in adoption of collaboration software, video conferencing software and tele-medicine. The fact that all these services are powered by the cloud infrastructure has contributed big time to the change. 

During the April-June timeframe, total spending on public cloud IT infrastructure went up by 47.8% year on year to touch a whopping $14.1 billion. Private cloud infrastructure attracted an additional 7% spends during the period to touch $5 billion, of which on-premises private cloud accounted for a sizable 64% of the total. 

On its part, IDC holds the view that the hardware infrastructure market has reached a pinnacle and the only way forward for the sector could be down. The report justifies the tipping point, given the increasingly high share of cloud environments in the overall infrastructure spends of enterprises across the world. 

Spending on cloud IT infrastructure increased across all regions during the Q2 of this year with China and the US delivering the highest annual growth rates at 60.5 percent and 36.9 percent respectively. Additionally, in all regions except Central and Easter Europe and the Middle East and Africa, growth in public cloud infrastructure exceeded growth in private cloud IT during this time period.

Coming to specific companies in the world that led the Cloud IT Infrastructure market, Dell Technologies took the honours with revenues of $2.4 billion to capture a 13.2 percent market share followed by HPE/New H3C Group at almost $2 billion and 10.4 percent market share. Inspur and Inspur Power Systems took third place followed by Lenovo and Cisco.

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