According to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 36.9% year over year in the first quarter of 2024 (1Q24) to $33.0 billion. Spending on cloud infrastructure continues to outgrow the non-cloud segment with the latter growing by 5.7% in 1Q24 to $13.9 billion. The cloud infrastructure segment experienced slower growth in unit demand of 11.4%, due to the continued increase in average selling prices (ASPs) mostly related to higher than usual GPU server shipments.
“Cloud infrastructure spending growth continues being driven by the explosion of AI-related investments, which not only impact servers but also started to have positive influence on enterprise storage as well,” said Juan Pablo Seminara, research director for IDC’s Worldwide Enterprise Infrastructure Tracker. “Even though some caution still remains on the socio-political side, it has become clear that AI investment plans are not slowing down in 2024 and will continue growing at a high rate this year and beyond. Additionally, the improvement on economic prospects contributes to a very positive spending outlook for 2024 and 2025 where cloud-based spending will increase at double-digit pace.”
Spending on shared (public) cloud infrastructure reached $26.3 billion in the quarter, increasing 43.9% compared to a year ago. The shared cloud infrastructure category continues to hold the largest share of spending compared to dedicated (private) cloud deployments and non-cloud spending. In 1Q24, shared cloud accounted for 56.1% of total infrastructure spending. The dedicated cloud infrastructure segment saw lower growth of 15.3% year over year in 1Q24 to $6.7 billion.
For 2024, IDC is forecasting cloud infrastructure spending will grow 26.1% compared to 2023 to $138.3 billion. Non-cloud infrastructure is forecast to grow 8.4% to $64.8 billion. Shared cloud infrastructure is expected to grow 30.4% year over year to $108.3 billion for the full year. Spending on dedicated cloud infrastructure is also expected to have double-digit growth in 2024 at 12.8% reaching $30.0 billion for the full year. The subdued growth forecast for non-cloud infrastructure at 8.4% in 2024 reflects that even though most of the growth will come from cloud spending, general non-cloud dedicated systems are set to recover this year.
IDC’s service provider category includes cloud service providers, digital service providers, communications service providers, hyperscalers, and managed service providers. In 1Q24, service providers as a group spent $32.2 billion on compute and storage infrastructure, up 37.9% from the prior year. This spending accounted for 68.7% of the total market. Non-service providers (e.g., enterprises, government, etc.) also increased their spending to $14.7 billion growing 5.8% year over year. IDC expects compute and storage spending by service providers to reach $132.2 billion in 2024, growing at 26.2% year over year.
On a geographic basis, year-over-year spending on cloud infrastructure in 1Q24 showed very positive results in general, where only Latin America presented a decline of 2.8% while Western Europe and Middle East & Africa were the only regions that grew by single digits at 4.0% and 5.3% respectively. These results were largely affected by political tensions that delayed investments plans. The regions that showed solid double-digit growth were Asia/Pacific (excluding Japan and China), Japan, Central & Eastern Europe, USA, China (PRC), and Canada, where cloud spending grew at 85.4%, 53.1%, 42.6%, 37.0%, 33.7%, and 16.1% year over year, respectively. Most of the growth is related to large high performance computing (HPC) and AI-based large projects, some of which were delayed due to supply issues in the past.
Long term, IDC predicts spending on cloud infrastructure will have a compound annual growth rate (CAGR) of 14.3% over the 2023-2028 forecast period, reaching $213.7 billion in 2028 and accounting for 75.0% of total compute and storage infrastructure spend. Shared cloud infrastructure spending will account for 77.5% of the total cloud spending in 2028, growing at a 14.8% CAGR and reaching $165.6 billion. Spending on dedicated cloud infrastructure will grow at a CAGR of 12.6% to $48.2 billion. Spending on non-cloud infrastructure will also rebound with a 3.6% CAGR, reaching $71.4 billion in 2028. Spending by service providers on compute and storage infrastructure is expected to grow at a 13.8% CAGR, reaching $199.9 billion in 2028.
A graphic illustrating IDC’s 2023-2028 forecast for enterprise infrastructure spending by category (shared cloud, dedicated cloud, and non-cloud) is available by viewing this press release on IDC.com.
IDC’s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment is designed to provide clients with a better understanding of what portion of the compute and storage hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors’ revenue into shared and dedicated cloud environments for historical data and provides a five-year forecast. This Tracker is part of the Worldwide Quarterly Enterprise Infrastructure Tracker, which provides a holistic total addressable market view of the four key enabling infrastructure technologies for the datacenter (servers, external enterprise storage systems, and purpose-built appliances: HCI and PBBA).
Taxonomy Notes
IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service.
Shared cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. The shared cloud market includes a variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters; these services in total are called public cloud services. The shared cloud market also includes digital services such as media/content distribution, sharing and search, social media, and e-commerce.
Dedicated cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In dedicated cloud that is managed by in-house staff, “vendors (cloud service providers)” are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the “service users.”
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