Spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 14.9 per cent year over year in the first quarter of 2023, according to beancounters at IDC
The IDC Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment report says that spending on cloud infrastructure continues to outpace the non-cloud segment, with the latter declining 0.9 per cent in 1Q23 to $13.8 billion.
The cloud infrastructure segment saw unit demand down 11.4 per cent. Still, average selling prices (ASPs) grew 29.7 per cent, driven by inflationary pressure and a higher concentration of GPU-accelerated systems deployed by cloud service providers.
Spending on shared cloud infrastructure reached $15.7 billion in the quarter, increasing 22.5 per cent compared to a year ago.
IDC expects continuous strong demand for shared cloud infrastructure, which is expected to surpass non-cloud infrastructure in spending in 2023. The dedicated cloud infrastructure segment declined 1.5 per cent year over year in 1Q23 to $5.8 billion. Of the total dedicated cloud infrastructure, 44.5 per cent was deployed on customer premises during the quarter.
For 2023, IDC forecasts cloud infrastructure spending to grow 7.3 per cent compared to 2022 to $96.4 billion – a slight improvement from the prior outlook for the year of 6.9 per cent. Non-cloud infrastructure is expected to decline 6.3 per cent to $60.4 billion.
Shared cloud infrastructure is expected to grow 8.4 per cent year over year to $68.0 billion for the entire year, while spending on dedicated cloud infrastructure is expected to grow 4.8 per cent to $28.4 billion for the full year.
The subdued growth forecast reflects the expectation that the market will face significant macroeconomic headwinds and curbed demand with cloud staying positive due to the drive for modernisation, opex focus, and continued growth in digital consumer services demand. At the same time, non-cloud contracts as enterprise customers shift towards capital preservation.
IDC’s Infrastructure Systems, Platforms, and Technologies Group research VP Kuba Stolarski said that cloud infrastructure spending remains resilient in the face of macroeconomic challenges.
“The segment is grappling with substantial price hikes, and the first quarter marked the second consecutive quarter of declining system unit demand. Although the overall outlook for the year remains positive, its growth hinges on the expectation that volume will drive it. Prolonged stagnation in demand could pose a significant obstacle to growth for the remainder of this year,” Stolarski said.
