Hyperscale Operator Capex Jumps 43% in 2018 while Telco Spending Remains Flat

RENO, NV, March 7, 2019

New data from Synergy Research Group shows that hyperscale operator capex reached over $32 billion in Q4, far surpassing each of the first three quarters of the year, which had themselves set records. Full-year hyperscale capex jumped 43% to almost $120 billion. Meanwhile telco capex was over double that of hyperscale operators, but notably telco spending remained at the same level as the previous two years. The top five hyperscale spenders in 2018 were Google, Amazon, Microsoft, Facebook and Apple. Coincidentally their aggregate 2018 capex was almost identical to the capex of the top five telco spenders – China Mobile, AT&T, Verizon, NTT and Deutsche Telekom.Capex Q418 The hyperscale data 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 2018 included Alibaba, Tencent, IBM, JD.com and Baidu. Much of the hyperscale capex goes towards building, expanding and equipping huge data centers, which have now grown in number to 439. The telco data is based on tracking and analysis of the world’s 40 largest telcos, which in aggregate account for 85% of the communications services market.

“The hyperscale operators are quickly becoming the capex kings of the IT world,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “On average hyperscale operator revenues are growing by 20% per year driven by expansion of cloud services, e-commerce, social media and online advertising; and it is notable that the leading players are investing an ever-increasing share of their revenues into capex. This is in stark contrast to telcos who are seeing neither revenues nor capex growing. We do not see these trends changing any time soon.”

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 sales@srgresearch.com or 775-852-3330 extension 101.