Spending on cloud infrastructure deployments increased 2.9 percent year over year in the third quarter of 2023 (3Q23) to reach $25.4 billion, IDC report said.
The data, provided by the IDC Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, highlights the contrasting performance of cloud and non-cloud segments during this period.
While spending on cloud infrastructure experienced positive momentum, the non-cloud segment faced an 8.2 percent decline in 3Q23, totaling $14.9 billion. The cloud infrastructure segment saw a decline in unit demand by 23.9 percent, primarily offset by an increase in average selling prices (ASPs), notably due to higher GPU server shipments to hyperscalers.
Juan Pablo Seminara, the research director of Worldwide Enterprise Infrastructure Trackers, noted that the shift in cloud infrastructure spending is directed towards robust configurations to address complex workloads and support emerging AI initiatives.
Looking ahead, IDC provides a positive spending outlook for 2024, anticipating double-digit growth in cloud-based spending throughout the year. In the third quarter, spending on shared (public) cloud infrastructure reached $18.5 billion, marking a 7.2 percent increase compared to the previous year and capturing the largest share of total infrastructure spending at 45.9 percent.
In contrast, dedicated (private) cloud infrastructure witnessed a 7.2 percent decline year over year in 3Q23, amounting to $6.9 billion. For the full year 2023, IDC forecasts cloud infrastructure spending to grow by 9.7 percent compared to 2022, reaching a total of $100.6 billion. Non-cloud infrastructure, on the other hand, is expected to decline by 7.7 percent, reaching $58.7 billion.
Service providers (cloud service providers, digital service providers, communications service providers, hyperscalers, and managed service providers) spent $24.9 billion on Cloud infrastructure, representing a 1.7 percent increase from the previous year and constituting 61.7 percent of the total market. Conversely, non-service providers (such as enterprises and government entities), lowered their spending to $15.4 billion, marking a 6.3 percent decline year over year.
IDC expects Cloud infrastructure spending by service providers to further increase, reaching $98.5 billion in 2023 and growing by 8.3 percent year over year. On a geographical basis, cloud infrastructure spending in 3Q23 showed mixed results, with various regions experiencing negative growth, including Canada, Central & Eastern Europe (CEE), Western Europe, Middle East & Africa (MEA), and Latin America.
However, regions such as Japan, China, Asia/Pacific (excluding Japan and China), and the United States witnessed increased spending during the same period. Looking ahead, IDC predicts a compound annual growth rate (CAGR) of 10.6 percent for global spending on cloud infrastructure over the 2022-2027 forecast period, reaching $152.0 billion in 2027 and accounting for 68.8 percent of total compute and storage infrastructure spend.
Shared cloud infrastructure spending is expected to constitute 70.5 percent of total cloud spending in 2027, growing at an 11.1 percent CAGR and reaching $107.1 billion.
Meanwhile, spending on dedicated cloud infrastructure is forecasted to grow at a CAGR of 9.7 percent to $44.9 billion.
Non-cloud infrastructure spending is anticipated to remain relatively flat with a 1.6 percent CAGR, reaching $68.9 billion in 2027.
Spending by service providers on compute and storage infrastructure is expected to grow at a 10.4 percent CAGR, reaching $148.9 billion in 2027.
