The end of last year saw cloud providers resume spending big on compute and storage infrastructure after a cooldown in the middle of the year that occurred from overprovisioning at the beginning of the pandemic according to new data from IDC (opens in new tab).
As reported (opens in new tab) by The Register, the market intelligence firm has released its latest tracker (opens in new tab) covering buyer and cloud deployment which shows that spending on compute and storage infrastructure products increased to $18.6bn during Q3 of 2021.
While global cloud spending saw a huge boom in the first quarter of last year, there was a slight dip in Q2 when spending decreased by 1.9 percent. What made this sudden fall stand out is the fact that it took place after seven quarters of year-on-year cloud spending growth that started back in 2019 (opens in new tab).
Although a sudden decrease in demand for cloud infrastructure may seem odd after consecutive quarters of spending, IDC accounts for it because of heightened investment in new infrastructure during 2020 as a result of the pandemic.
Pandemic-related cloud spending
As businesses and their employees shifted to the cloud in order to work from home (opens in new tab) during the pandemic, spending on cloud infrastructure saw a higher-than-expected increase during 2020 according to IDC research director Andrew Buss who spoke with The Register.
Based on the market intelligence firm's own figures, cloud infrastructure spending increased by 55.1 percent during the second quarter of 2020 due to a spike in demand for public cloud (opens in new tab) services. Whether it was video conferencing software (opens in new tab) or online collaboration tools (opens in new tab), businesses and their employees quickly needed a way to continue operating using the cloud as opposed to in-person at the office.
During the third quarter of last year though, spending on infrastructure for public cloud reached $13bn while spending on dedicated cloud infrastructure increased by 13.4 percent to reach $5.6bn. When it comes to the entirety of last year, IDC forecasts that cloud infrastructure spending will show an increase of 8.3 percent when compared to the previous year which equates to a total of $71.8bn.
Going forward, IDC predicts that compute and storage spending for cloud infrastructure will expand at a compound annual growth rate of 12.4 percent for 2020-2025 before reaching $118.8bn in 2025.
Although pandemic-related cloud spending may be over, the cloud has become a way of life for businesses and will likely continue to expand as more organizations adopt hybrid work (opens in new tab) strategies as part of their return to the office.
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Via The Register (opens in new tab)