Cloud starts taking bite out of data center construction

By 2018, fewer enterprises will run their own infrastructure. That will put the kibosh on new data center building---unless you're a cloud provider, says IDC.
Written by Larry Dignan, Contributor

Data center construction and remodeling will peak in 2017 and then begin a slow decline as enterprises move to the cloud, according to IDC projections.

IDC is projecting that the total number of data centers will peak at 8.6 million in 2017 and then start to decline. Enterprises will pare back on internal data center server rooms and server closets starting in 2017.

As the number of data centers declines, the square footage will still increase from 1.58 billion in 2013 to 1.94 billion in 2018. Why? Data center construction will increasingly reside with cloud providers scaling out services. Enterprise data centers will be retooled to be a hub for information exchange and cloud services.

Specifically, mega data centers used by cloud providers will account for 72.6 percent of all construction and 44.6 percent of all high-end data center space globally.

IDC analyst Richard Villars noted that the majority of companies will stop running their own infrastructure over the next five years.

Add it up and IDC's projections point to a global enterprise vendor shakeout that we're already starting to see. Consider:

  1. Server vendors will be squeezed as their customer base becomes concentrated. 
  2. The movement toward integrated systems will also be concentrated among enterprises that choose to run their own data centers. 
  3. Networking, storage and other equipment providers will also take a hit. 
  4. White box manufacturers will increasingly gain sales in the server market. 
  5. And hardware vendors will scramble to invest and become big cloud players to offset declining sales.

Many of those items are already happening today. If IDC's forecast is correct, the squeeze on large IT vendors is just beginning.

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