Spending on Cloud Infrastructure Continued Growth in 2Q18

According to IDC, vendor revenue from sales of infrastructure products (server, enterprise storage, and Ethernet switch) for cloud IT, including public and private cloud, grew 48.4% year over year in the second quarter of 2018 (2Q18), reaching $15.4 billion. IDC also raised its forecast for total spending (vendor recognized revenue plus channel revenue) on cloud IT infrastructure in 2018 to $62.2 billion with year-over-year growth of 31.1%.

Quarterly spending on public cloud IT infrastructure has more than doubled in the past three years to $10.9 billion in 2Q18, growing 58.9% year over year. By end of the year, public cloud will account for the majority, 68.2%, of the expected annual cloud IT infrastructure spending, growing at an annual rate of 36.9%. In 2Q18, spending on private cloud infrastructure reached $4.6 billion, an annual increase of 28.2%. IDC estimates that for the full year 2018, private cloud will represent 14.8% of total IT infrastructure spending, growing 20.3% year over year.

The combined public and private cloud revenues accounted for 48.5% of the total worldwide IT infrastructure spending in 2Q18, up from 43.5% a year ago and will account for 46.6% of the total worldwide IT infrastructure spending for the full year. Spending in all technology segments in cloud IT environments is forecast to grow by double digits in 2018.

The traditional (non-cloud) IT infrastructure segment grew 21.1% from a year ago, a rate of growth comparable to 1Q18 and exceptional for this market segment, which is expected to decline in the coming years. At $16.4 billion in 2Q18 it still accounted for the majority, 51.5%, of total worldwide IT infrastructure spending. For the full year, worldwide spending on traditional non-cloud IT infrastructure is expected to grow by 10.3% as the market goes through a technology refresh cycle, which will wind down by 2019.

By 2022, IDC expects that traditional non-cloud IT infrastructure will only represent 44.0% of total worldwide IT infrastructure spending (down from 51.5% in 2018). This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

All regions grew their cloud IT Infrastructure revenue by double digits in 2Q18. Asia/Pacific (excluding Japan) (APeJ) grew revenue the fastest, by 78.5% year over year. Within APeJ, China's cloud IT revenue almost doubled year over year, growing at 96.4%, while the rest of Asia/Pacific (excluding Japan and China) grew 50.4%. Other regions among the fastest growing in 2Q18 included Latin America (47.4%), USA (44.9%), and Japan (35.8%).

Long-term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 11.2%, reaching $82.9 billion in 2022, and accounting for 56.0% of total IT infrastructure spend. Public cloud datacenters will account for 66.0% of this amount, growing at an 11.3% CAGR. Spending on private cloud infrastructure will grow at a CAGR of 12.0%.