Cloud Infrastructure Spending Closes Out the Fourth Quarter and 2021 with Strong Growth, According to IDC

According to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud infrastructure, including dedicated and shared environments, increased 13.5% year over year in the fourth quarter of 2021 (4Q21) to $21.1 billion. This marked the second consecutive quarter of year-over-year growth as supply chain constraints have depleted vendor inventories over the past several quarters. As backlogs continue to grow, pent-up demand bodes well for future growth as long as the economy stays healthy, and supply catches up to demand.

For the full year 2021, cloud infrastructure spending totaled $73.9 billion, up 8.8% over 2020.

Investments in non-cloud infrastructure increased 1.5% year over year in 4Q21 to $17.2 billion, marking the fourth consecutive quarter of growth. For the full year, non-cloud infrastructure spending increased 4.2% over 2020, reaching a total of $59.6 billion.

Spending on shared cloud infrastructure reached $14.4 billion in the fourth quarter, increasing 13.9% compared to a year ago, and grew to $51.4 billion for 2021, an increase of 7.5%. IDC expects to see continuously strong demand for shared cloud infrastructure with spending expected to surpass non-cloud infrastructure spending in 2022. Spending on dedicated cloud infrastructure increased 12.5% year over year in 4Q21 to $6.7 billion and grew 11.8% to $22.5 billion for the full year 2021. Of the total dedicated cloud infrastructure, 47.5% in 4Q21 and 46.1% in 2021 were deployed on customer premises.

For the 2022, IDC is forecasting cloud infrastructure spending to grow 21.7% compared to 2021 to $90.0 billion, while non-cloud infrastructure is expected to decline slightly, down 0.3% to $59.4 billion. Shared cloud infrastructure spending is expected to grow 25.5% year over year to $64.5 billion for the full year. Spending on dedicated cloud infrastructure is expected to grow 13.1% to $25.4 billion in 2022.

As part of the Tracker, IDC tracks various categories of service providers and how much compute and storage infrastructure these service providers purchase, including both cloud and non-cloud infrastructure. The service provider category includes cloud service providers, digital service providers, communications service providers, and managed service providers. In 4Q21, service providers as a group spent $21.2 billion on compute and storage infrastructure, up 11.6% from 4Q20. This spending accounted for 55.4% of total compute and storage infrastructure spending. For 2021, spending by service providers reached $75.1 billion on 8.5% year over year growth, accounting for 56.2% of total compute and storage infrastructure spending. IDC expects compute and storage spending by service providers to reach $89.1 billion in 2022, growing at 18.7% year over year.

At the regional level, year-over-year spending on cloud infrastructure in 4Q21 increased in most regions. Asia/Pacific (excluding Japan and China) (APeJC) grew the most at 59.5% year over year. Canada, Central and Eastern Europe, Japan, Middle East and Africa, and China (PRC) all saw double-digit growth in spending. The United States grew 5.6%. Western Europe and Latin America declined for the quarter. For 2021, APeJC grew the most at 43.7% year over year. Canada, Central and Eastern Europe, Middle East and Africa, and China all saw double-digit growth in spending. Japan grew in the high single digits, while Western Europe grew in the low single digits. The United States grew 1.5%. Latin America declined for the year. For 2022, cloud infrastructure spending for most regions is expected to grow with the highest growth expected in the United States at 27.8%. Central and Eastern Europe is the only region expected to decline in 2022 with spending forecast to be down 21.7% year over year.

Long term, IDC expects spending on compute and storage cloud infrastructure to have a compound annual growth rate (CAGR) of 12.6% over the 2021-2026 forecast period, reaching $133.7 billion in 2026 and accounting for 68.6% of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 72.0% of the total cloud amount, growing at a 13.4% CAGR. Spending on dedicated cloud infrastructure will grow at a CAGR of 10.7%. Spending on non-cloud infrastructure will flatten out at a CAGR of 0.5%, reaching $61.2 billion in 2026. Spending by service providers on compute and storage infrastructure is expected to grow at a 11.7% CAGR, reaching $130.6 billion in 2026.IDC’s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment is designed to provide clients with a better understanding of what portion of the compute and storage hardware markets are being deployed in cloud environments. The Tracker breaks out each vendors’ revenue into shared and dedicated cloud environments for historical data and provides a five-year forecast. This Tracker is part of the Worldwide Quarterly Enterprise Infrastructure Tracker, which provides a holistic total addressable market view of the four key enabling infrastructure technologies for the datacenter (servers, external enterprise storage systems, and purpose-built appliances: HCI and PBBA).

Taxonomy Notes
IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service.

Shared cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. The shared cloud market includes a variety of services designed to extend or, in some cases, replace IT infrastructure deployed in corporate datacenters; these services in total are called public cloud services. The shared cloud market also includes digital services such as media/content distribution, sharing and search, social media, and e-commerce.

Dedicated cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In dedicated cloud that is managed by in-house staff, “vendors (cloud service providers)” are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the “service users.”