Hyperscale Capex Reached $22 billion in Q4 and is Still Growing Rapidly

RENO, NV, February 28, 2018

New Q4 data from Synergy Research Group shows that the capex of hyperscale operators totaled $22 billion in the quarter and reached almost $75 billion for the full year, representing 19% growth over 2016. Much of that hyperscale capex goes towards building and expanding huge data centers, which have now grown in number to 400. The top five spenders are Google, Microsoft, Amazon, Apple and Facebook, which in aggregate account for over 70% of Q4 hyperscale capex. Across all hyperscale operators, 2017 capex equated to just over 7% of total revenues, although the ratio varies greatly by company, from a low of 2% to a high of 17% depending on the nature of the business. The research is based on analysis of the capex and data center footprint of 24 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce.Hyperscale capex Q417 On average during 2017, the top five of Google, Amazon, Microsoft, Apple and Facebook in aggregate spent well over $13 billion per quarter. It is also notable that 2017 capex growth was particularly strong at Amazon and Facebook. Outside of the top five, other major hyperscale spenders include Alibaba, IBM, Oracle, SAP and Tencent. Among these five, Alibaba capex more than doubled in 2017, while growth at both Oracle and SAP was also above average. Other notables outside of the top ten include Baidu, eBay, JD.com, NTT, PayPal, Salesforce, Yahoo Japan and Yahoo/Oath.

“Over the last four years we have seen many companies try and fail to compete with the leading cloud providers. The capex analysis emphasizes the biggest reason why those cloud providers are so difficult to challenge,” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group. “Can you afford to pump at least a billion dollars a quarter into your data center capex budget? If you can’t, then your ability to meaningfully compete with the market leaders is severely limited. Of course factors other than capex are at play, but the basic financial table stakes are enormous.”

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.