Service Provider Cloud

Cloud infrastructure spending reaches new heights in 2021, led by AWS – report

The force was strong with cloud infrastructure services spending in 2021, up 8.8% over 2020 for a total of $73.9 billion, according to a new report by IDC.

Amazon Web Services (AWS) led with 33% of spending on cloud infrastructure services in Q4 2021, according to research group Canalys. Microsoft Azure was runner up with 22% of spending, followed by Google Cloud with 9%. The three companies accounted for 64% of total cloud investment for 2021.

The fourth quarter was the icing on the cake for a solid year: In Q4, investment in compute and storage infrastructure services was up 13.5% year-over-year, reaching $21.1 billion, despite supply chain shortages, according to IDC.

"This marked the second consecutive quarter of year-over-year growth as supply chain constraints have depleted vendor inventories over the past several quarters," the research firm explained. "As backlogs continue to grow, pent-up demand bodes well for future growth as long as the economy stays healthy, and supply catches up to demand."

IDC predicts spending on cloud infrastructure services to increase 21.7% in 2022 to $90.0 billion.

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By 2026, IDC predicts a compound annual growth rate (CAGR) of 12.6% to reach $133.7 billion and account for 68.6% of total compute and storage infrastructure services spending.

Investment by region

On a regional basis, Asia-Pacific (excluding Japan and China) led the charge for cloud infrastructure services spending, up 59.5% YoY for Q4 2021.

Canada, Central and Eastern Europe, Japan, the Middle East, Africa and China also experienced double-digit growth in spending for Q4. With the exception of Japan, which grew in the high single digits for 2021, these regions also experienced double-digit growth in spending for the full year.

The US experienced mild growth of 5.6% in Q4 and 1.5% for 2021. However, Western Europe declined in Q4 and only grew in low single digits for 2021. Latin America declined in Q4 and for the full year.

IDC predicts growth in cloud infrastructure services spending across most regions for 2022, with the highest growth anticipated for the US at 27.8%. However, Central and Eastern Europe are forecasted to decline in 2022, down 21.7% YoY.

Shared cloud infrastructure spending

Shared cloud (public cloud) infrastructure spending was up 13.9% YoY to $14.4 billion in Q4 and reached $51.4 billion for the full year, an increase of 7.5%. IDC forecasts shared cloud infrastructure spending to grow 25.5% YoY to $64.5 billion for 2022, exceeding non-cloud infrastructure investments.

By 2026, shared cloud infrastructure will account for 72.0% of the total cloud amount, growing at a rate of 13.4% CAGR.

Dedicated cloud infrastructure spending

Investment in dedicated cloud infrastructure (private cloud), increased 12.5% YoY in Q4 to $6.7 billion, and was up 11.8% to $22.5 billion for 2021.

"Of the total dedicated cloud infrastructure, 47.5% in 4Q21 and 46.1% in 2021 were deployed on customer premises," said IDC.

Dedicated cloud infrastructure investments are forecasted to grow 13.1% to $25.4 billion this year. IDC predicts spending on dedicated cloud infrastructure to increase at a CAGR of 10.7% by 2026.

Non-cloud infrastructure investments

By comparison, spending on non-cloud infrastructure only increased 1.5% YoY in Q3 2021 to $17.2 billion, but this was the fourth consecutive quarter of growth. For all of 2021, non-cloud infrastructure investments were up 4.2% over 2020, hitting $59.6 billion.

IDC forecasts non-cloud infrastructure to drop 0.3% to $59.4 billion in 2022 and to flatten out at a CAGR of 0.5%, reaching $61.2 billion in 2026.

Spending by service providers

Unsurprisingly, the bulk of spending on cloud infrastructure services stemmed from cloud, digital and communications service providers, which spent $21.2 billion on compute and storage infrastructure in Q4 2021, up 11.6% YoY. That amount accounted for 55.4% of total compute and storage infrastructure spending.

For the full year, service providers invested $75.1 billion on compute and storage infrastructure, up 8.5% YoY and accounting for 56.2% of total spending in this area. IDC predicts compute and storage spending by service providers will hit a whopping $89.1 billion this year, which would be a 18.7% increase year over year.

Compute and storage infrastructure investment by service providers is forecasted to increase 11.7% CAGR, reaching $130.6 billion in 2026, said IDC.

— Kelsey Kusterer Ziser, Senior Editor, Light Reading

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