Dell’Oro expects greater cloud data center capex in 2020

March 31, 2020

The current COVID-19 coronavirus pandemic may help push cloud spending upwards this year, says a Dell’Oro analyst.

Cloud data center capex, particularly server purchases, should grow at a faster rate in 2020 than last year, Dell'Oro Group predicts in a newly released report. The market research firm states in its latest Cloud Data Center Capex Quarterly Report that the 10 largest cloud service providers spent a combined $66 billion in 2019 for a sparse year-on-year growth rate of 3%.

The current COVID-19 coronavirus pandemic may help push cloud spending upwards this year, says a Dell’Oro analyst. "Despite recent market uncertainties, we anticipate the Tier 1 cloud service providers to increase data center capex as planned, primarily on servers, as the sector seeks to resume capacity expansion," said Baron Fung, research director at Dell'Oro. "We project a steep decline in enterprise IT spending due to severe near-term supply and demand disruptions from COVID-19. Enterprises will seek to conserve capital during these uncertain times, and resort to the cloud to satisfy near-term demand for digital services. We expect that the cloud service providers will need to expand their infrastructure at a measured pace to capture this incremental demand."

Dell’Oro expects spending on servers to compose 47% of data center capex in 2020. Looking back at 2019, the market research firm states that Amazon Web Services maintained a 50% share of cloud revenues, while Microsoft Azure and Google Cloud Platform gained share.

The Cloud Data Center Capex Quarterly Report covers the capital spending of each of the 10 largest cloud service providers. The report provides numbers and other information on facilities and servers by geographic region and availability zone as well as 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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About the Author

Stephen Hardy | Editorial Director and Associate Publisher, Lightwave

Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.

Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.

He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.

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