Spending on compute and storage infrastructure products for cloud deployments witnessed a notable surge of 7.9 percent year over year in the second quarter of 2023 (2Q23), amounting to a substantial $24.6 billion.
Meanwhile, spending on non-cloud infrastructure faced an 8.3 percent decline in 2Q23, settling at $14.4 billion. This trend affirms the continuous growth and dominance of cloud infrastructure in the tech market, according to the latest report from the International Data Corporation (IDC) Worldwide Quarterly Enterprise Infrastructure Tracker.
Cloud infrastructure spending is shifting towards robust configurations geared towards more complex workloads and new AI initiatives.
Despite a decline in unit demand for the first half of the year, the spending outlook for 2023 remains optimistic, fueled by the expectation of sustained higher average selling prices (ASPs) throughout the year, Juan Pablo Seminara, the research director at IDC’s Worldwide Enterprise Infrastructure Tracker, said.
In the shared cloud infrastructure category, spending reached $17.9 billion in Q2, marking a substantial increase of 13.7 percent compared to the previous year. This category has overtaken non-cloud spending in H1 2023, constituting 45.8 percent of the total infrastructure spending. Conversely, the dedicated cloud infrastructure segment saw a 4.9 percent decline year over year in 2Q23, totaling $6.7 billion. Of this, 43.9 percent was deployed on customer premises during the quarter.
Looking ahead, IDC predicts cloud infrastructure spending to surge by 10.6 percent in 2023, reaching an impressive $101.4 billion, a slight improvement from the prior outlook of 7.3 percent growth. On the other hand, non-cloud infrastructure spending is expected to decline by 7.9 percent to $58.5 billion.
Shared cloud infrastructure is anticipated to grow by 13.5 percent to $72.0 billion, while spending on dedicated cloud infrastructure is projected to increase by 4.1 percent to $29.4 billion for the full year. This divergence in growth reflects the evolving market dynamics and the burgeoning demand for advanced, performance-oriented systems.
The report also highlighted the spending patterns concerning service providers and geographic regions. Service providers, including cloud and digital service providers, spent $24.1 billion on compute and storage infrastructure in 2Q23, representing a 7.1 percent increase from the previous year and accounting for 61.9 percent of the total market.
On a geographic basis, cloud infrastructure spending witnessed growth in all regions except Canada, Central & Eastern Europe (CEE), impacted by the Russia-Ukraine conflict, and Western Europe, facing challenges due to high energy prices and a tight macroeconomic environment.
Long-term projections from IDC indicate a robust compound annual growth rate (CAGR) of 11.3 percent for spending on cloud infrastructure over the 2022-2027 forecast period, projecting a figure of $156.7 billion in 2027, constituting 69.4 percent of total compute and storage infrastructure spending.
Shared cloud infrastructure spending is predicted to represent 70.0 percent of the total cloud amount, growing at an 11.6 percent CAGR and reaching $109.7 billion in 2027. In contrast, spending on non-cloud infrastructure is expected to grow at a 1.7 percent CAGR, reaching $69.1 billion in 2027. Service providers’ spending on compute and storage infrastructure is forecasted to grow at a 10.9 percent CAGR, reaching $152.6 billion in 2027.