The ICT Capex (capital expenditure) of webscale companies — including Alibaba, Alphabet, Amazon, Baidu, Facebook, Microsoft and Tencent — will grow at a 19.5 percent CAGR to over $63 billion in 2022.
Top webscale companies will make more investment in network capacity to support traffic growth, and data center expansions to support the growth of their cloud businesses globally, according to Technology Business Research.
Microsoft’s Azure and Alphabet’s Google Cloud are aiming to close the market share gap with market leader Amazon Web Services (AWS) by increase in the spending towards ICT Capex.
Webscale companies are developing machine learning (ML) and artificial intelligence (AI) features, though development is not Capex-intensive. Cloud providers are investing in AI and ML to differentiate their core solutions.
“AWS is the leading IaaS provider by revenue, but Microsoft Azure and Google Cloud are growing revenue faster than the incumbent due to years of data center investment across geographies,” said Michael Soper, a senior analyst at TBR.
Microsoft, the US-based software major, is closing the gap quickly and will challenge AWS in the short term. The report said Google, the Internet search engine, is a long-term threat to AWS and others.
Beyond data centers, webscale companies are making undersea cable investments to support cloud and video traffic growth. Alphabet, Amazon, Facebook and Microsoft will continue to build these networks to carry traffic across oceans and typically partner with each other as they do so.
Technology vendors are coping with a lower level of loyalty from webscale companies, when compared to their traditional customers, as they leverage contract manufacturers and/or their own design teams for new infrastructure.
The success of ODMs such as Quanta, Arista, SuperMicro and Celestica, along with new efforts to capitalize on the webscale market from IT services providers, will fragment the supplier landscape.
