Cloud spending surpasses traditional infrastructure expenditure for the first time

IDC thinks cloud-related IT spending will start to slow over the next year though

Cloud Growth

IDC has revealed that cloud infrastructure has generated more revenue for tech businesses compared to traditional IT infrastructure for the first time ever.

During the third quarter of 2018, cloud infrastructure components, such as servers, enterprise storage, and Ethernet switches grew by 47.2%, with the research firm estimating this will result in 37.2% growth for the entirety of 2018.

Cloud-related revenues accounted for 50.9% of the total worldwide IT infrastructure vendor revenues, up more than 7% year-on-year.

"The first three quarters of 2018 were exceptional for the IT Infrastructure market across all deployment environments and the increase in IT infrastructure investments by public cloud datacenters was especially strong driven by the opening of new datacentres and infrastructure refresh in existing datacentres," said Natalya Yezhkova, research director, IT Infrastructure and Platforms.

However, the company has predicted this growth will start to slow in the next 12 months as cloud vendors make some changes to their operational structure, specifically in supply chain.

"After such a strong year we expect some slowdown in 2019 as the overall market cools down and some cloud providers work through adjustments in their supply chain. However, IDC expects the shift in IT infrastructure spending toward cloud environments will continue."

Dell continued to dominate the market, with 50.7% revenue growth in Q3 2018 compared to the same quarter of 2017, although Lenovo's revenue growth was perhaps the most impressive - its cloud-related revenues grew by 182%, increasing its market share from 2.5% in Q3 2017 to 4.8% in Q3 2018. Little-known vendor Inspur also made great strides, with growth of 179.4% year-on-year and taking 6.3% of the market share.

By 2022, IDC expects traditional IT infrastructure spending to decrease to 42.4% of the total worldwide IT infrastructure spend as more businesses move away from traditional architecture to embrace the cloud.

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