Synergy Research: Hyperscale Operator Capex at New Record in Q3-2020

Hyperscale cloud operator capex topped $37 billion in Q3-2020, which easily set a new quarterly record for spending, according to Synergy Research Group (SRG). Total spending for the first three quarters of 2020 reached $99 billion, which was a 16% increase over the same period last year.

Synergy Research Group’s latest data found that cloud service provider capex that was specifically targeted at data centers in the first three quarters increased by 18% compared to 2019.

The top-four hyperscale spenders in the first three quarters of this year were Amazon, Google, Microsoft and Facebook. Those four easily exceeded the spending by the rest of the hyperscale operators.  The next biggest cloud spenders were Apple, Alibaba, Tencent, IBM, JD.com, Baidu, Oracle, and NTT.

SRG’s data found that capex growth was particularly strong across Amazon, Microsoft, Tencent and Alibaba while Apple’s spend dropped off sharply and Google’s also declined.

Capex Q320

Much of the hyperscale capex goes towards building, expanding and equipping huge data centers, which grew in number to 573 at the end of Q3. The hyperscale data is based on analysis of the capex and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce. In aggregate these twenty companies generated revenues of over $1.1 trillion in the first three quarters of the year, up 15% from 2019.

“As expected the hyperscale operators are having little difficulty weathering the pandemic storm. Their revenues and capex have both grown by strong double-digit amounts this year and this has flowed down to strong growth in spending on data centers, up 18% from 2019,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “They generate well over 80% of their revenues from cloud, digital services and online activities, all of which have seen COVID-19 related boosts. As these companies go from strength to strength they need an ever-larger footprint of data centers to support their rapidly expanding digital activities. This is good news for companies in the data center ecosystem who can ride along in the slipstream of the hyperscale operators.”

Separately, Google Cloud announced it is set to add three new ‘regions,’ which provide faster and more reliable services in targeted locations, to its global footprint. The new regions in Chile, Germany and Saudi Arabia will take the total to 27 for Google Cloud.

About Synergy Research Group:

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database tool, which enables easy access to complex data sets. Synergy’s CustomView ™ takes this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence. Synergy is a strategic partner of TeleGeography.

To speak to an analyst or to find out how to receive a copy of a Synergy report, please contact sales@srgresearch.com or 775-852-3330 extension 101.

References:

https://www.srgresearch.com/articles/hyperscale-operator-capex-sets-new-record-reaches-100-billion-in-first-three-quarters

One thought on “Synergy Research: Hyperscale Operator Capex at New Record in Q3-2020

  1. Analysys Mason: Cloud technology will pervade the 5G mobile network, from the core to the RAN and edge

    “CSPs’ spending on multi-cloud network infrastructure software, hardware and professional services will grow from USD4.3 billion in 2019 to USD32 billion by 2025, at a CAGR of 40%.”

    5G and edge computing are spurring CSPs to build multi-cloud, cloud-native mobile network infrastructure
    Many CSPs acknowledge the need to use cloud-native technology to transform their networks into multi-cloud platforms in order to maximise the benefits of rolling out 5G. Traditional network function virtualisation (NFV) has only partly enabled the software-isation and disaggregation of the network, and as such, limited progress has been made on cloudifying the network to date. Indeed, Analysys Mason estimates that network virtualisation reached only 6% of its total addressable market for mobile networks in 2019.

    The telecoms industry is now entering a new phase of network cloudification because 5G calls for ‘true’ clouds that are defined by cloud-native technologies. This will require radical changes to the way in which networks are designed, deployed and operated, and we expect that investments will shift to support this new paradigm. The digital infrastructure used for 5G will be increasingly built as horizontal, open network platforms comprising multiple cloud domains such as mobile core cloud, vRAN cloud and network and enterprise edge clouds. As a result, we have split the spending on network cloud into spending on multiple cloud domains (Figure 1) for the first time in our new network cloud infrastructure report. We forecast that CSP spending on multi-cloud network infrastructure software, hardware and professional services will grow from USD4.3 billion in 2019 to USD32 billion by 2025, at a CAGR of 40%.

    https://www.analysysmason.com/research/content/comments/network-cloud-forecast-comment-rma16/

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