Highlights:

  • The analyst firm IDC believes that the second quarter of 2020 marked a tipping point as cloud sales exceeded non-cloud infrastructure for the first time.
  • During the second quarter, about 47.8% of spending increased on public cloud IT infrastructure year over year to reach approximately USD 14.1 billion.

The COVID-19 led to a significant shift in the way that business and consumers use online services. This is why the analyst firm IDC believes that the second quarter of 2020 marked a tipping point as cloud sales exceeded non-cloud infrastructure for the first time.

As per the firm’s Worldwide Quarterly Cloud IT Infrastructure Tracker, the revenue from sales of IT infrastructure products for cloud environments such as Ethernet switches, servers, and enterprise storage increased by about 34.4% during the second quarter (Q2). However, during the same period, investments in traditional, non-cloud infrastructure declined by about 8.7%.

During the pandemic, there was a worldwide shift to online tools across both consumers and businesses. Further, it led to the rising adoption of telemedicine, collaboration software, and video conferencing software powered by the cloud.

During the second quarter of this year, about 47.8% of spending increased on public cloud IT infrastructure year over year to reach approximately USD 14.1 billion. Whereas, spending on private cloud infrastructure increased by about 7% year over year to USD 5 billion with on-premises private cloud accounting for about 64.1% of this amount.

Tipping point

As per IDC, the hardware infrastructure industry has reached the tipping point. Thus, cloud environments will continue to account for the high revenue share of overall spending. Spending on cloud IT infrastructure increased across all regions during the second quarter of this year, with the US and China delivering the highest annual growth rates over 60.5% and 36.9%, respectively. Besides, all regions, except the Middle East and Africa and Central and Eastern Europe, an increase in public cloud infrastructure exceeded growth in private cloud IT.

In the Cloud IT Infrastructure market, Dell Technologies was on the top with USD 2.4 billion revenue and about 13.2% industry share, followed by HPE/New H3C Group at almost USD 2 billion revenue and about 10.4% overall industry share. However, Inspur and Inspur Power Systems took third place, further followed by Cisco and Lenovo.

As businesses across several industries learned that their employees could work from home productively, expect cloud spend to remain high, particularly as employees will likely want to continue using the software and services.

Thus, the rising use of online tools during COVID-19 led to a significant rise in cloud sales.