Highlights:

  • Since the epidemic started in March 2020, spending on cloud infrastructure has increased as businesses have expedited their digital transformations.
  • IDC anticipates shared cloud infrastructure spending will surpass non-cloud spending for the first time in 2022 due to rising demand for shared cloud spending in particular.

With business customers spending USD 18.3 billion on cloud computing and storage infrastructure in the first quarter of 2022, up 17.2 percent year over year, spending on cloud services is likely to reach another critical tipping point.

Budgets for both dedicated and shared infrastructure are included in the total. Spending on shared cloud infrastructure, which accounted for USD 12.5 billion (68%) of the total, was a significant growth driver. IDC, a tech analyst, noted a 15.7% increase in that subcategory from Q1 2021.

IDC anticipates shared cloud infrastructure spending to surpass non-cloud spending for the first time in 2022, mainly due to the rising demand for shared cloud spending.

IDC has been tracking the spending between non-cloud and cloud infrastructure to evaluate the change in purchases of traditional data center compute, storage equipment, and IT infrastructure in public clouds from companies like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others like Digital Ocean.

Although not as positive as it is for cloud providers, the outlook for non-cloud IT infrastructure providers is still good. Spending on non-cloud infrastructure increased this quarter year over year to USD 14.8 billion, up 9.8%. It was the fifth quarter in a row that saw growth.

Though IDC doesn’t provide the revenue share between public cloud providers, analyst Canalys did. The report found that AWS received 33% of the USD 53.5 billion spent globally on cloud infrastructure in Q4 2021, followed by Azure with 22%, and Google Cloud with 9%. Other providers received the remaining 36%.

Since the pandemic started in March 2020, spending on cloud infrastructure has increased as businesses have expedited their digital transformations. Except for a 1.9% year-over-year dip in Q2 2021, spending has increased for seven consecutive quarters starting in Q3 2019. The most significant year-over-year growth was in Q2 2020, at 38.4%. The amount spent on cloud infrastructure in Q4 2021 increased by 13.5% year over year to USD 21.1 billion.

Cloud infrastructure spending vs. non-cloud spending

The market for non-cloud spending is still huge and is predicted to increase during the entire year, albeit much more slowly than cloud spending.

IDC predicts that spending on cloud infrastructure will increase by 22% and reach USD 90.2 billion in total in 2022, compared to last year. It states that this is the most significant yearly growth rate since 2018. It is anticipated that spending on conventional IT infrastructure will increase 1.8% to USD 60.7 billion.

Only a portion of the rise in spending can be attributed to the increased purchase of cloud-delivered infrastructure. Other significant factors include inflation and slow but steady improvement of the world’s clogged supply chains and logistical networks.

At a regional level, IDC anticipates yearly growth in cloud infrastructure spending to increase by 20 – 25% in China, the US, Western Europe, and Asia Pacific/Japan. Speeding in Central and Eastern Europe is predicted to decrease by 54% in 2022 because of Russia’s invasion of Ukraine.

Between 2021 and 2026, the analyst anticipates that computing and storage cloud infrastructure spending will expand at a Compound Annual Growth Rate (CAGR) of 14.5%. It projects that spending will amount to USD 145.2 billion in 2026, making up 69.7% of all computing and storage infrastructure expenditures.

Spending on non-cloud infrastructure is anticipated to increase at a CAGR of 1.2% and reach USD 63.1 billion in 2026.

Spendings of cloud service providers

IDC also examines the spending of managed, cloud, and digital service providers, which make up 55.3% of IT infrastructure spending. In Q1 2022, this group invested USD 18.3 billion, or 14.5% more than the previous year, in computing and storage infrastructure.

Spending by non-service providers increased by 12.9% Y-o-Y in Q1 2022, which was the highest growth for 14 quarters. Spending by service providers on IT infrastructure increased by 18.7% Y-o-Y to USD 89.1 billion in 2022.