Hyperscale data centers set to dominate global capacity

Large data centers operated by hyperscale providers now account for a significant 37 percent of the total worldwide capacity of all data centers, according to a recent report by Synergy Research Group. This finding highlights the rapid growth and dominance of hyperscale operators in the global data center landscape.
Data center capacity trends 2023The research indicates that approximately half of the hyperscale capacity is housed in own-built, owned data centers, while the remaining half is located in leased facilities. This balanced distribution reflects the strategic approach taken by hyperscale providers to optimize their infrastructure and meet the increasing demands of their clients.

Interestingly, the report also reveals a significant shift in the distribution of data center capacity over the past five years. Previously, on-premise data centers held the majority share, representing nearly 60 percent of the total capacity. However, the landscape has since transformed, with on-premise facilities now accounting for a mere 40 percent.

Looking ahead, the study projects that hyperscale operators will continue to expand their dominance, with their capacity accounting for over half of the total data center capacity worldwide within the next five years. Meanwhile, on-premise facilities are expected to experience a further decline, dropping to less than 30 percent.

While the on-premise share of total capacity is projected to decrease, the actual capacity of on-premise data centers is expected to see only marginal reductions. Instead, the growth in hyperscale capacity will be the primary driver behind the steady increase in the overall capacity of all data centers over the next five years.

The research conducted by Synergy was based on a comprehensive analysis of the data center footprint and operations of 19 major cloud and internet service firms worldwide. These firms represent a wide range of sectors, including software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), search, social networking, e-commerce, and gaming.

Additionally, the report sheds light on the evolving expenditure patterns of enterprises in the data center industry. A decade ago, companies were allocating a significant portion of their budget, over $80 billion per year, to IT hardware and software for their own data centers. In contrast, the nascent cloud infrastructure services received less than $10 billion in annual spending.

However, the landscape has since experienced a drastic shift, with spending on data center hardware and software growing at a modest average of 2 percent per year. In contrast, expenditure on cloud services has skyrocketed, growing at an average annual rate of 42 percent. In 2022 alone, spending on cloud services reached a staggering $227 billion.

The surge in hyperscale operator growth can be attributed to the rapid development of consumer-oriented digital services, such as social networking, e-commerce, and online gaming. As these services continue to gain popularity and become increasingly integral to people’s lives, hyperscale providers have capitalized on the demand, propelling their growth in the market.

The report by Synergy Research Group underlines the transformative power of hyperscale data centers and the shifting dynamics within the data center industry. With the continuous rise of hyperscale capacity and the ongoing adoption of cloud services, the data center landscape is poised for further evolution in the coming years.

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