Cloud IT Infrastructure Revenue Reaches $32.6 Billion in 2016

By: Kelley Katsanos| - Leave a comment

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Vendor revenue from the sale of IT infrastructure products, including private and public cloud, expanded 9.2 percent year over year to $32.6 billion in 2016, with a fourth-quarter increase of 7.3 percent to $9.2 billion, according to new data from IDC.

Meanwhile, cloud infrastructure sales accounted for 37.2 percent of total global IT spending in the fourth quarter of 2016, up from 33.4 percent the year prior, the researchers found. Furthermore, private cloud infrastructure revenue grew 10.2 percent to $3.8 billion, and public cloud revenue increased by 5.3 percent to $5.4 billion. IDC shows a 9 percent decrease in noncloud IT infrastructure year over year.

Ethernet switch leads private cloud infrastructure sales, with 52.7 percent growth year over year. Server and storage sales follow with 9.3 percent and 3.6 percent, respectively. For public cloud infrastructure sales, Ethernet switch is also ahead at 30 percent year-over-year growth, followed by server sales at 2.4 percent. IDC shows a decline in storage at 2.1 percent. However, the biggest drop is evident in the area of storage for traditional IT infrastructure, with IDC showing a 10.8 percent decline from a year ago.

Diving Into the Cloud IT Infrastructure Market

Despite these declines, IDC expects growth for the cloud infrastructure market in 2017.

“Growth slowed to single digits in 2016 in the cloud IT infrastructure market as hyperscale cloud data center growth continued its pause,” Kuba Stolarski, research director for Computing Platforms at IDC, said in a statement. “Network upgrades continue to be the focus of public cloud deployments, as network bandwidth has become by far the largest bottleneck in cloud data centers.”

“After some delays for a few hyperscalers, data center build-outs and refresh are expected to accelerate throughout 2017, built on newer-generation hardware, primarily using Intel’s Skylake architecture,” Stolarski added.

Regionally, Japan takes the lead for cloud infrastructure sales with year-over-year growth at 42.3 percent in the fourth quarter of 2016, followed by Middle East and Africa at 33.6 percent, IDC reports. In Canada, Western Europe, Asia/Pacific, Central and Eastern Europe and Latin America, vendor revenue growth lags behind, with the U.S. at the very bottom.

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About The Author

Kelley Katsanos

News Writer

Kelley Katsanos is a freelance writer specializing in business and technology. She has previously worked in business roles involving marketing analysis and competitive intelligence. Her freelance work appears at IBM Midsize Insider, Houston Chronicle's chron.com, and AZ Central Small Business. Katsanos earned a Master of Science in Information Management from Arizona State University as well as a bachelor's degree in Business with an emphasis in marketing. Her interests include information security, marketing strategy, and business process improvement.