IT infrastructure spending by cloud environments to be strong in 2016

According to the latest forecast from IDC (www.idc.com), total spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments will increase by 15.5% in 2016 to reach $37.1 billion. This amount excludes double counting between storage and servers, according to the research group.

In comparison, spending on enterprise IT infrastructure deployed in traditional, non-cloud, environments will decline by 4.4% in 2016, but will still account for the largest share, 63.4%, of end user spending. Spending on private cloud IT infrastructure will grow by 10.3% year over year to $13.8 billion with more than 60% of this amount contributed by on-premises private cloud environments. Spending on public cloud IT infrastructure will increase by 18.8% in 2016 to $23.3 billion.

All regions are expected to increase spending on cloud IT infrastructure in 2016 with investments in public cloud growing at a faster rate than investments in private cloud IT infrastructure. For cloud environments combined, spending on Ethernet switches will be growing at the highest rate, 39.5%, while spending on server and storage will grow at 11.4% and 14.2%, respectively.

For the long-term forecast, IDC expects that spending on IT infrastructure for cloud environments will grow at a 13.1% compound annual growth rate (CAGR) to $59.5 billion in 2020. This will represent 48.7% of the total spending on enterprise IT infrastructure. Spending on non-cloud IT infrastructure will decline at 1.4% CAGR during the same period. Within the cloud segment, spending on public and private cloud IT infrastructure will grow at 18.8% and 10.3% CAGR respectively. In 2020, IDC expects public cloud service providers (CSPs) will spend $38.4 billion on IT infrastructure for delivering services, while spending on private cloud IT infrastructure will reach $21.1 billion.

“Despite weakness in hyperscale CSP demand for IT infrastructure products in the first quarter, we expect spending on public cloud to increase in the second half of the year,” said Natalya Yezhkova, research director, Storage Systems, IDC. “Overall, we will continue to see steady growth in demand for public cloud services and, as a result, underlying spending on IT infrastructure by CSPs. The economic and financial volatility we see in some regions will push demand further as increasing sophistication of public cloud offerings allows organizations to fulfill their needs across a growing variety of IT domains while OPEX-oriented pricing models provide some relief to tightening IT budgets.”