3Q19 cloud data center capex jumps double digits: Dell'Oro

The good news in the third quarter was almost entirely driven by new data center construction, as only Amazon and IBM, among the Top 10, upped their server capex to expand server capacity.

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An increase in spending on the building of new data centers drove double-digit growth in the capital expenditures (capex) of cloud data center operators during the third quarter of this year, Dell’Oro Group reports. The Top 10 cloud service providers spent a combine $17.9 billion on data centers during the quarter, a 14% year-over-year bump, the market research firm states in its latest Cloud Data Center Capex Quarterly Report.

"Cloud data center capex for the Top 10 cloud service providers returned to growth after two straight quarters of year-over-year declines," said Baron Fung, director at Dell'Oro Group (see "2019 cloud data center capex to decline from 2018: Dell’Oro"). "We project that spending on servers will increase in 2020, as the major cloud service providers revert to server capacity expansion and fill new data centers scheduled to launch next year."

Dell’Oro expects the Top 10 cloud service providers to open data centers in nearly 40 new regions in 2020. The good news in the third quarter was almost entirely driven by new data center construction, as only Amazon and IBM, among the Top 10, upped their server capex to expand server capacity.

The Cloud Data Center Capex Quarterly Report covers capex spending of each of the 10 largest cloud service providers. Data is provided on facilities and servers by geographic region and availability zone as well as on the number of installed servers. The report also discusses market trends, drivers of the leading cloud service providers' capex growth during the quarter, and the outlook for the next year.

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