Cloud computing spend grows again after slight dip

Spending on cloud infrastructure continues to eat into budgets for traditional IT infrastructure spending.
Written by Liam Tung, Contributing Writer

Global spending on cloud infrastructure returned to growth in Q3 2021 after the first quarterly decline since the pandemic triggered a massive increase in spending. 

According to researcher IDC, spending on cloud infrastructure across dedicated and shared environments increased 6.6% year on year to $18.6 billion in Q3 2021. The growth put spending back on track with the seven consecutive quarters of growth since Q3 2019, with the exception of the 1.9% decline in Q2 2021. 

The main boost in cloud spending happened in Q2 2020, which saw 38.4% year-on-year growth.

SEE: Cloud computing: Spreading the risk with the multicloud approach

Cloud, whether dedicated or shared, is expected to continue to eat into traditional hardware spending in the future. The 2020 split on spending between 'non-cloud & dedicated', 'cloud & shared', and 'cloud & dedicated' infrastructure was 46.4%, 37.5%, and 16.2%. 

IDC expects this order to be reversed by 2025: by then it expects spending on compute and storage cloud infrastructure to reach $118.8 billion and account for 67% of all compute and storage spend. Of that amount spent on cloud, shared infrastructure will dominate cloud spending with a 70.9% of that investment.   

Cloud infrastructure spending in 2021 is likely to have grown 8.3% compared to 2020 to $71.8 billion, according to IDC projections. Meanwhile, spending on non-cloud IT infrastructure in is expected to have grown just 1.9% in 2021 to $58.4 billion, which is actually a positive result after two years of decline. 

Spending on shared cloud infrastructure should also have grown by 7.2% year over year to $49.7 billion for 2021, while dedicated cloud infrastructure spending is expect to have grown 10.7% to $22.2 billion for the full year. 

IDC's figures for cloud and non-cloud cover spending from several service provider types, including cloud service providers, digital service providers, communications service providers, and managed service providers. This group saw spending of $18.9 billion on compute and storage infrastructure, up 6.7% year on year, and accounted for 57% of all compute and storage infrastructure spending. IDC expects spending to reach $72.6 billion in 2021, up 7.4% from last year. 

SEE: Cloud computing is the key to business success. But unlocking its benefits is hard work

Spending in the Asia/Pacific region, excluding Japan and China, grew fastest at 64.3% year on year in 3Q21, while the U.S. saw the weakest growth at 1.1%.

Rival analyst Canalys estimated Q3 2021 spending on cloud infrastructure services reached almost $50 billion thanks to accelerated digital transformations. AWS leads with a 32% share of revenues, followed by Microsoft's 21%, and Google's 8%. However, Canalys warned that compute demand was outstripping chip manufacturing capabilities. 

Editorial standards