IDC: Cloud IT Infrastructure Revenues Continue to Expand Despite Slow Down in Spending

Vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, grew 11.4 percent year over year in the first quarter of 2019. That’s according to IDC’s Worldwide Quarterly Cloud IT Infrastructure Tracker, which pegged the corresponding dollar amount to $14.5 billion. The Framingham Massachusetts-based market researcher also lowered its forecast for total spending on cloud IT infrastructure in 2019 to $66.9 billion – down 4.5 percent from last quarter’s forecast – with slower year-over-year growth of 1.6 percent.

Vendor revenue from hardware infrastructure sales to public cloud environments in 1Q19 was down 13.4 percent compared to the previous quarter (4Q18) but increased 8.9 percent year over year to $9.8 billion. This segment of the market continues to be highly impacted by demand from a handful of hyperscale service providers, whose spending on IT infrastructure tends to have visible up and down swings. After a strong performance in 2018, IDC expects the public cloud IT infrastructure segment to cool down in 2019 with vendor revenue dropping to $44.5 billion, a 2.2 percent decrease from 2018.

Overall, IDC says the IT infrastructure industry is at a crossroads in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50 percent mark for the first time but has since fallen below this important threshold. In 1Q19, cloud IT environments accounted for 48.8 percent of vendor revenues. For the full year 2019, spending on cloud IT infrastructure will remain just below the 50% mark at 49.4 percent. Over the long-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.

“As the overall IT infrastructure goes through a period of slowdown after an outstanding 2018, the important trends might look somewhat distorted in the short term,” said Natalya Yezhkova, research vice president, Infrastructure Systems, Platforms and Technologies at IDC. “IDC’s long-term expectations strongly back continuous growth of cloud IT infrastructure environments. With vendors and service providers finding new ways of delivering cloud services, including from IT infrastructure deployed at customer premises, end users have fewer obstacles and pain points in adopting cloud/services-based IT.”

Most regions grew their cloud IT Infrastructure revenues in 1Q19. Middle East & Africa was fastest growing at 35.3 percent year over year, followed by Western Europe at 25.4 percent year-over-year growth. The U.S. was measured at 10.7 percent.

Channel Impact^®
The data provide a guide by which channel partners can compare their own sales performance against the findings of the tracker report.