2018 Hyperscale Capex is Running at 53% Above 2017 Levels

RENO, NV, November 20, 2018

New Q3 data from Synergy Research Group shows that the capex of hyperscale operators once again topped $26 billion in the quarter, keeping 2018 numbers at record-setting levels. Hyperscale capex for the first three quarters is up 53% compared with the same period in 2017. Q3 capex would have been the highest ever had it not been for Google's purchase of Manhattan’s Chelsea Market building in March, which gave the Q1 numbers a $2.4 billion boost. While the relative ranking moves around each quarter, for the last ten quarters the top five group of spenders has always consisted of Google, Microsoft, Amazon, Apple and Facebook, which in aggregate account for 70% of hyperscale capex. Microsoft capex reached a record level in Q3, while capex at the other four leaders dropped off marginally compared with the all-time highs seen in the previous quarter. Beyond this group, Alibaba capex leapt in the quarter putting it way ahead of other hyperscale operators.hyperscale capex Q318 Much of the hyperscale capex goes towards building, expanding and equipping huge data centers, which have now grown in number to 423. The research is based on analysis of the capex and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce. Outside of the top five, other leading hyperscale spenders in Q2 included Alibaba, Baidu, IBM, JD.com, NTT and Tencent.

“Business at the hyperscale operators is booming. Over the last four quarters their year-on-year revenue growth has averaged 24% and they are investing an ever-growing percentage of their revenues in capex,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “That is a real boon for data center technology vendors and for colocation/wholesale data center operators, but it has created a huge barrier for companies wishing to meaningfully compete with those hyperscale firms. This is a game of massive scale and only a few can play that game.”

About Synergy Research Group

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database tool, which enables easy access to complex data sets. Synergy’s CustomView ™ takes this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence. Synergy is a strategic partner of TeleGeography.

To speak to an analyst or to find out how to receive a copy of a Synergy report, please contact Heather Gallo at hgallo@srgresearch.com or 775-852-3330 extension 101.