Vendor revenue for infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, increased 34.4% year over year in the second quarter of 2020 (2Q20), according to IDC's Worldwide Quarterly Cloud IT Infrastructure Tracker. Investments in traditional, non-cloud, IT infrastructure declined 8.7% year over year in 2Q20.
Some observations from IDC:
- Rapid shifts in business, educational, and societal activities caused by the COVID-19 pandemic had a direct effect on IT infrastructure spending.
- These include massive shifts to online tools in all aspects of human life, including collaboration, virtual business events, entertainment, shopping, telemedicine, and education.
- Spending on public cloud IT infrastructure increased 47.8% year over year in 2Q20, reaching $14.1 billion and exceeding the level of spend on non-cloud IT infrastructure for the first time. Spending on private cloud infrastructure increased 7% year over year in 2Q20 to $5 billion with on-premises private clouds accounting for 64.1% of this amount.
- IDC believes the hardware infrastructure market has reached the tipping point and cloud environments will continue to account for an increasingly higher share of overall spending.
- While IDC increased its forecast for both cloud and non-cloud IT spending for the full year 2020, investments in cloud IT infrastructure are still expected to exceed spending on non-cloud infrastructure, 54.8% to 45.2%.
- Most of the increase in spending will be driven by public cloud IT infrastructure, which is expected to slow in 2H20 but increase by 16% year over year to $52.4 billion for the full year. Spending on private cloud infrastructure will also experience softness in the second half of the year and will reach $21.5 billion for the full year, an increase of just 0.3% year over year.
- Within cloud deployment environments in 2020, compute platforms will remain the largest segment (50.9%) of spending at $37.7 billion while storage platforms will be the fastest-growing segment with spending increasing 21.2% to $27.8 billion, and the Ethernet switch segment will grow 3.9% year over year to $8.5 billion.
- Spending on cloud IT infrastructure increased across all regions in 2Q20 with the two largest regions, China and the U.S., delivering the highest annual growth rates at 60.5% and 36.9% respectively.
- In all regions except Central & Eastern Europe and the Middle East & Africa, growth in public cloud infrastructure exceeded growth in private cloud IT.
- At the vendor level, the results were mixed. Inspur more than doubled its revenue from sales to cloud environments, climbing into a tie* for the second position in the vendor rankings while the group of original design manufacturers (ODM Direct) grew 63.6% year over year. Lenovo's revenue exceeded $1 billion, growing at 49.3% year over year.
