Data Center Investments are Dramatically Reshaping the IT Industry

RENO, NV, November 19, 2015

New data from Synergy Research Group shows worldwide spend on cloud infrastructure services continues to grow at around 50% per year, requiring the leading cloud providers to invest many billions of dollars in expanding their global network of hyperscale data centers. The top four cloud providers alone have some 110 data centers located in 20 different countries, most of which are huge facilities. Synergy expects their data center count to grow by 20% in the next twelve months, which will be in addition to expanding the capacity of existing facilities. Synergy has also identified well over $25 billion in recent data center-oriented M&A deals, with data center specialists like Equinix, Digital Realty, NTT and IBM leading the charge. The need to continually invest in expensive data center facilities is dramatically reshaping the IT industry.cloud dc q315 upd Economics and new technologies are causing companies to radically change the way they choose to support their IT needs, which is driving consolidation and restructuring in the cloud and data center markets. The impact of the changes can be seen in many places:

  • The four leading cloud infrastructure service providers are all growing at rates far in excess of the market and are steadily gaining share in a very high-growth market
  • Spending on enterprise data center equipment is static while spending on service provider data centers is booming
  • ODMs are growing market share and becoming an ever-more important feature of the vendor landscape
  • Many of the largest global data center/colocation specialists are continuing to gain market share at the expense of their less focused rivals
  • Several leading telcos are reconsidering their strategic options for their data center product lines due to the difficulty of investing enough money and focus on them.

“This is a time of unprecedented change in the IT industry. End users are getting access to flexible and agile IT services that they could only dream about a few years ago and CIOs are pulling back from buying and managing their own data centers. Why do something that is so difficult and so distracting when there are now much better options out there?” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group. “It’s all change. Companies like AWS and Microsoft are now major players in enterprise IT; IBM is totally reinventing itself; companies like Equinix and NTT are amassing huge data center footprints; while HPE and Cisco are aggressively growing their cloud technology business units. We do not expect the rate of change to lessen over the coming years.”

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.