Hyperscaler capital expenditure on track for record year
Fri 23 Nov 2018
As 2018 comes to a close, all indicators suggest it will be another record-breaking year for the major cloud providers
According to new Q3 data from Nevada-based Synergy Research Group, the capital expenditure of the hyperscale operators topped $26 million last quarter, maintaining the level recorded in Q2.
This means hyperscale capital expenditure for the first three quarters of 2018 is up 53 percent compared with the same period in 2017, which is in large part due to the major cloud providers competing to cement their global data centre presences.
Hyperscale data centres are the preserve of cloud, e-commerce, search and social media giants. A non-stop rise in customers and users is driving colossal demand for high-scale and high-performance infrastructure.
Although, it’s safe to say that it’s the cloud providers who are most desperate for new infrastructure, as cloud computing firmly establishes itself as a business necessity and widens its grip over global enterprise.
According to Synergy, the “top 5” hyperscale spenders are familiar faces: Google, Microsoft, Facebook, Apple and Amazon. Way behind the big five are the likes of Alibaba, Baidu, IBM, JD.com, NTT and Tencent.
Microsoft’s capital expenditure reached record levels in Q3, while that of the other four leaders dropped off compared with the all-time highs seen in the previous quarter. In tier two, Alibaba’s Q3 spending leapt ahead of all others.
The majority of the hyperscalers’ capital expenditure goes towards the building, expanding and equipping of huge data centres. 423 of these giant data estates now exist across the world, a number that will only rise in the coming years.
Just this week, Google announced the construction of a $700m data centre in Denmark. Another in Henderson was recently confirmed after the Nevada Governor signed off a $25.2m tax abatement.
“Business at the hyperscale operators is booming. Over the last four quarters their year-on-year revenue growth has averaged 24 percent and they are investing an ever-growing percentage of their revenues in capex,” said John Dinsdale, a Chief Analyst at Synergy Research Group.
“That is a real boon for data centre technology vendors and for colocation/wholesale data centre operators, but it has created a huge barrier for companies wishing to meaningfully compete with those hyperscale firms. This is a game of massive scale and only a few can play that game.”
According to another report released by Synergy this week, AWS enjoys 40 percent of the cloud market and dominates all four of the world’s major regions. Azure is ranked second in three of the four regions, and Google Cloud ranked third in three of them.