Compute and Storage Cloud Infrastructure Increased 16% Y/Y in 4Q22 to $24 Billion

According to IDC‘s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment, spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 16.3% Y/Y in 4Q22) to $24.1 billion. Spending on cloud infrastructure continues to outgrow the non-cloud segment although the latter had strong growth in 4Q22 as well, increasing 9.4% Y/Y to $18.7 billion. For 2022, cloud infrastructure grew 19.4% to $87.7 billion, while non-cloud grew 13.6% to $66.7 billion. The market continues to benefit from high demand, large backlogs, rising prices, and an improving infrastructure supply chain.

Spending on shared cloud infrastructure reached $16.8 billion in 4Q22, increasing 18.5% compared to 4Q21. For 2022, spending on shared cloud infrastructure totaled $61.5 billion, growing 20.1% Y/Y. Continuous strong demand for shared cloud infrastructure, which is expected to surpass non-cloud infrastructure in spending in 2023. The dedicated cloud infrastructure segment grew 11.5% Y/Y in 4Q22 to $7.2 billion, and 18.0% in 2022 to $26.2 billion. Of the total dedicated cloud infrastructure, 45.5% was deployed on customer premises during 4Q22, and 45.2% for 2022.

For 2023, IDC is forecasting cloud infrastructure spending to grow 6.9% compared to 2022 to $93.7 billion – a significant decrease from the 19.4% annual growth in 2022. Non-cloud infrastructure is expected to decline 10.3% to $59.8 billion. Shared cloud infrastructure is expected to grow 7.5% Y/Y to $66.1 billion for 2023, while spending on dedicated cloud infrastructure is expected to grow 5.4% to $27.6 billion for 2023. The subdued growth forecast reflects the expectation that the market will face significant macroeconomic headwinds and curbed demand, with cloud staying positive due to the drive for modernization, Opex focus, and continued growth in digital consumer services demand, while non-cloud spending contracts as enterprise customers shift towards capital preservation.

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 4Q22, service providers as a group spent $24.1 billion on compute and storage infrastructure, up 16.0% from 4Q21. This spending accounted for 56.3% of the total market. Non-service providers (e.g., enterprises, government, etc.) increased their spending at a lower rate, 9.7% Y/Y. For 2022, service providers spent $87.9 billion, up 18.0% Y/Y, and accounting for 56.9% of total compute and storage spending. Meanwhile, non-service providers grew 15.4% to $66.4 billion. Compute and storage spending by service providers will reach $92.3 billion in 2023, growing at 5.1% from 2022.

On a geographic basis, Y/Y spending on cloud infrastructure in 4Q22 increased in all regions except Central & Eastern Europe (CEE), which is impacted by the Russia-Ukraine war. Spending in CEE declined 54.0% Y/Y. Latin America, Middle East & Africa (MEA), Western Europe, and USA grew the most at 38.6%, 38.0%, 25.5%, and 21.8% Y/Y, respectively. All other regions demonstrated growth in the teens and single digit percentages. For 2022, CEE declined 39.7%, MEA grew the most at 41.0%, and all other regions grew in the 10-30% range. For 2023, cloud infrastructure spending is expected to grow in all regions except CEE and MEA, with China (PRC) expected to grow 19.8%. All other regions (AsiaPac-excluding Japan and China, Canada, Japan, Latin America, USA, and Western Europe) are expected to post annual growth in the 0-10% range.

Long term, spending on cloud infrastructure will have a CAGR of 10.5% over the 2022-2027 forecast period, reaching $144.3 billion in 2027 and accounting for 67.6% of total compute and storage infrastructure spend. Shared cloud infrastructure will account for 71.7% of the total cloud amount, growing at a 11.0% CAGR and reaching $103.5 billion in 2027. Spending on dedicated cloud infrastructure will grow at a CAGR of 9.3% to $40.7 billion. Spending on non-cloud infrastructure will grow at a CAGR of 0.7%, reaching $69.0 billion in 2027. Spending by service providers on compute and storage infrastructure is expected to grow at a 10.0% CAGR, reaching $141.3 billion in 2027.