Synergy said that the spend on cloud infrastructure is increasing by 9% to an eye-watering $700 billion in total in 2022.
Synergy’s latest report laid out the cloud capex spending for hyperscalers, telcos and enterprises between 2016 and the end of this year. Hyperscalers and telcos largely spend cloud capital on networking and data center hardware and software, while enterprises mostly flash the cash on IT infrastructure, which is primarily data centers, networking and collaboration tools.
Hyperscaler capex has increased the most between 2016 and 2022, with the proportion up by 20% to 29% of the total infrastructure spend, the firm found. “Hyperscale operator share of total spending has continued to rise steadily over the last few years, as continued growth in cloud and other digital services drive ever-higher spending levels,” Synergy said.
Nineteen companies meet the firm’s criteria for being hyperscale operators. These companies include Amazon, Google, Facebook, Microsoft, Apple and Alibaba.
John Dinsdale, the chief analyst at Synergy, told Silverlinings via email that well over half of all hyperscale operator capex is directed at data centers. “The rest goes towards warehouses, distribution, transport, retail outlets, manufacturing, HQ, etc,” he wrote.
This is no surprise, Dinsdale told us. “Large, global data center footprints are essential for these companies. It is like the beating heart for their operations and for serving customers,” the analyst said.
Synergy reported that enterprise cloud infrastructure has bounced back — growing 6% to 29% — after a soft spell in 2019 and 2020. This is thanks to the growth in cloud collaboration software, network security spending, and a post-pandemic rebound.
Telco cloud capex spending, in contrast, is in the doldrums. Remaining largely flat at 42% over the last six years. Synergy said that the biggest telco cloud spenders include China Mobile, Deutsche Telekom and Verizon.
Dinsdale expects 2023 to be another banner year for cloud revenue and capex.
“2023 will have a few wrinkles due to things like continued COVID and political issues in China (five of the hyperscale operators are Chinese), a strong US dollar (which has the effect of dampening reported growth rates for non-US operations), and some financial hiccups at Meta,” the analyst wrote.
“But cloud revenue growth will remain very strong and will continue to drive investments in data centers. The staff reductions and cost-cutting measures that have been reported in a few places are not in any meaningful way targeted at investments in data center infrastructure," he added.
What do you think 2023 will look like? Write to us here.