First-quarter cloud IT infrastructure revenues show slowing demand for public cloud

According to the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker, first quarter revenue for infrastructure products reflect slowed demand for the hyperscale public cloud sector. Server, storage and Ethernet switch for both public and private cloud applications grew just 3.9 percent year over year, reaching a total of $6.6 billion in the first quarter of 2016. Infrastructure for private cloud led the growth, with a 6.8 percent increase over Q1 2015, compared with 1.9 percent growth for public cloud infrastructure.

In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased by 6 percent year over year in the first quarter, with declines in both storage and servers, and growth in Ethernet switch. Ethernet switch also showed strong year-over-year growth in both private and public cloud, growing more than 50 percent for each application.

“A slowdown in hyperscale public cloud infrastructure deployment demand negatively impacted growth in both public cloud and cloud IT overall,” said Kuba Stolarski, research director for Computing Platforms at IDC. “Private cloud deployment growth also slowed, as 2016 began with difficult comparisons to [Q1 2015], when server and storage refresh drove a high level of spend and high growth.”

“As the system refresh has mostly ended, this will continue to push private cloud and, more generally, enterprise IT growth downwards in the near term. Hyperscale demand should return to higher deployment levels later this year, bolstered by service providers who have announced new data center builds expected to go online this year. As the market continues to work through this short term adjustment period, with geopolitical wild cards such as Brexit looming, end-customers’ decisions about where and how to deploy IT resources may be impacted. If new data sovereignty concerns arise, service providers will experience added pressure to increase local datacenter presence, or face potential loss of certain customers’ workloads.”

From a regional perspective, vendor revenue from cloud IT infrastructure sales grew fastest in the Middle East and Africa, followed by Western Europe, Asia/Pacific and Canada.

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Lanier Norville

Lanier has been writing and editing for online publications for more than six years. Before joining StrataCloud, she led the content team at AirWatch, where she launched the AirWatch Blog and anchored AirWatch TV. Lanier has also served as the chief editor of TechNation and other magazines. She has worked with Pulitzer Prize-winning author Rick Bragg and has won several writing awards of her own. She is passionate about storytelling, emerging technology and the way software increasingly shapes our world.