NEEDHAM, Mass., March 28, 2024 – According to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 18.5% year over year in the fourth quarter of 2023 (4Q23) to $31.8 billion. Spending on cloud infrastructure continues to outgrow the non-cloud segment with the latter growing 16.4% year over year in 4Q23 to $18.9 billion. The cloud infrastructure segment saw unit shipments decline 22.8% in the quarter with an increase in average selling prices (ASPs) mostly related to higher than usual GPU server shipments to hyperscalers.

"Cloud infrastructure spending continues to accelerate towards more robust configurations mainly fueled by the explosion of AI-related investments," said Juan Pablo Seminara, research director, Worldwide Enterprise Infrastructure Trackers at IDC. "Even though some caution remains on the socio-political side, the improvement in economic prospects contribute to a very positive spending outlook for 2024 and 2025 where cloud-based spending is expected to rebound at double-digit growth rates."

Spending on shared cloud infrastructure reached $22.8 billion in the quarter, increasing 27.0% compared to a year ago. The shared cloud infrastructure category continues to capture the largest share of spending compared to dedicated deployments and non-cloud spending. In 4Q23, shared cloud accounted for 44.9% of total infrastructure spending. The dedicated cloud infrastructure segment saw modest growth of 1.4% year over year in 4Q23 to $9.0 billion.

For 2024, IDC is forecasting cloud infrastructure spending to grow 19.3% compared to 2023 to $129.9 billion. Non-cloud infrastructure is expected to decline 1.4% to $57.6 billion. Shared cloud infrastructure is expected to grow 21.6% year over year to $95.3 billion for the full year while spending on dedicated cloud infrastructure is expected to have robust growth of 13.3% in 2024 to $34.6 billion for the full year. The subdued growth forecast for non-cloud infrastructure, which is forecast to decline 1.4% year over year in 2024, reflects the expectation that the market still faces some challenges. Cloud spending will remain very positive due to new and existing mission-critical workloads, which often require higher-end, performance-oriented systems.

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IDC's service provider category includes cloud service providers, digital service providers, communications service providers, hyperscalers, and managed service providers. In 4Q23, service providers as a group spent $30.0 billion on compute and storage infrastructure, up 19.6% from the prior year. This spending accounted for 59.2% of the total market. Non-service providers (e.g., enterprises, government, etc.) also increased their spending to $20.7 billion, growing 15.2% year over year. IDC expects compute and storage spending by service providers to reach $124.3 billion in 2024, growing 21.8% year over year.

On a geographic basis, year-over-year spending on cloud infrastructure in 4Q23 showed mixed results, with China, the Middle East, and Canada showing negative growth led by China with a decline of 31.1%, mainly affected by an economy still under pressure in the fourth quarter of 2023. The Middle East & Africa saw spending decline 12.2% due to difficult year-over-year comparison that resulted from large projects at the end of the prior year. Spending in Canada declined 4.4% year over year. The regions with increased spending in 4Q23 were Asia/Pacific (excluding Japan and China), the United States, Central & Eastern Europe, Japan, Western Europe, and Latin America, where cloud spending grew at 48.2%, 40,6%, 11.3%, 10.5%, 2.7%, and 1.5% year over year, respectively. Most of this growth was related to large high-performance computing and AI-based projects.

Long term, IDC predicts spending on cloud infrastructure to have a compound annual growth rate (CAGR) of 12.8% over the 2023-2028 forecast period, reaching $199.1 billion in 2028 and accounting for 73.6% of total compute and storage infrastructure spend. Shared cloud infrastructure spending will account for 71.8% of the total cloud spending in 2028, growing at a 12.8% CAGR and reaching $143.0 billion. Spending on dedicated cloud infrastructure will grow at a CAGR of 12.9% to $56.1 billion. Spending on non-cloud infrastructure will also rebound with a 4.1 % CAGR, reaching $71.4 billion in 2028. Spending by service providers on compute and storage infrastructure is expected to grow at a 13.1% CAGR, reaching $188.5 billion in 2028.

IDC's Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment is designed to provide clients with a better understanding of what portion of the compute and storage hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors' revenue into shared and dedicated cloud environments for historical data and provides a five-year forecast. This Tracker is part of the Worldwide Quarterly Enterprise Infrastructure Tracker, which provides a holistic total addressable market view of the four key enabling infrastructure technologies for the datacenter (servers, external enterprise storage systems, and purpose-built appliances: HCI and PBBA).

Taxonomy Notes

IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service.

Shared cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. The shared cloud market includes a variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters; these services in total are called public cloud services. The shared cloud market also includes digital services such as media/content distribution, sharing and search, social media, and e-commerce.

Dedicated cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In dedicated cloud that is managed by in-house staff, "vendors (cloud service providers)" are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the "service users."