Cloud IT Infrastructure Spending a Bright Spot Amid Pandemic’s Spread

IT infrastructure spending for cloud projects recovered in the fourth quarter of 2019 after two previous quarters of decline.

That proclamation comes from IDC in its latest Worldwide Quarterly Cloud IT Infrastructure Tracker. The research firm said end-user spending, which includes channel-generated revenue, was $19.4 billion in the final quarter of last year. The number comprised servers, storage, Ethernet switches for both public and private cloud environments.

In terms of vendors leading the cloud IT infrastructure charge, IDC reported ties for both third and fifth places. Analysts declare a tie when there is a difference of 1% or less in two or more vendors’ revenue shares. With that in mind, here is the tally IDC released for each provider’s fourth-quarter revenue and market share:

But the COVID-19 outbreak may cut short much excitement over a prolonged rebound.

The virus’ spread is slamming the brakes on planned technology projects, particularly those with a hefty capex component, worldwide. As a result, IDC expects non-cloud IT infrastructure spending to decline 9.2%, to $61.4 billion, in 2020. The firm forecasts overall IT infrastructure spending will drop 2.9%, to $130.6 billion.

A Bright Spot?

And yet, cloud offers a rare bright spot amid the COVID-19-fueled global economic implosion. Many organizations have scrambled to suddenly support work-from-home capabilities for employees, and are leaning on the cloud to achieve these ends. That will help 2020’s cloud IT infrastructure spending rise 3.6% over 2019’s $66.8 billion to $69.2 billion, IDC estimates.

Overall, here’s a quick look at 2019’s fourth-quarter cloud IT infrastructure market results from IDC:

IDC added that as cloud IT infrastructure investments keep increasing, regardless of quarterly fluctuations, the whole IT infrastructure industry is reaching the point where spending on cloud will consistently surpass spending on non-cloud. That holds true despite – or perhaps largely because of – the impact of the novel coronavirus.

IDC’s Kuba Stolarski

“As enterprise IT budgets tighten through the year, public cloud will see an increase in demand for services,” Kuba Stolarski, research director, infrastructure systems, platforms and technologies at IDC, said. “This increase will come in part from the surge of work-from-home employees using online collaboration tools, but also from workload migration to public cloud as enterprises seek ways to save money for the current year.”

Even so, the world must get through the rest of 2020 first. And doing so means finding ways to survive a pandemic that IDC dubbed “a severe threat to global growth.” Analysts said the cloud IT infrastructure’s demand and supply channels will continue to suffer from quarantine measures, worker illness, factory closures, and negative consumer and business sentiment.

Once the coronavirus threat passes, though, “IDC expects some of this new cloud service demand to remain sticky going forward,” Stolarski said.

To that point, the firm’s new five-year forecast predicts cloud IT infrastructure spending will reach $100.1 billion in 2024. That represents a compound annual growth rate of 8.4%. Non-cloud IT infrastructure spending will decline slightly to $65.3 billion, with a -0.7% CAGR. Total IT infrastructure is forecast to grow at a 4.2% CAGR and produce $165.4 billion in spending in 2024.

Surely such a projection comes as a welcome shift in the face of constant bad news.