At the end of last year, Synergy Research reported that hyperscale data centers were growing like gangbusters with 390 online as we closed out 2017. Today, the company released a new report indicating there are no signs that these large data centers are slowing down as cloud vendors and others like Facebook require ever more data center firepower to meet the growing demand.
Synergy looked at CapEx spending around these data centers and expected to see it drop off in the first quarter, but instead found it increased substantially. “Instead of the typical drop off seen at the beginning of the year, hyperscale CapEx in Q1 leapt to $27 billion, helped by the fact that CapEx at four of the big five hyperscale spenders reached historic highs,” John Dinsdale, a Chief Analyst and Research Director at Synergy wrote.
The usual suspects led the way with Google, Microsoft, Amazon, Apple, and Facebook combining for $20 billion in spending in the first quarter. That beats the average quarterly rate of $13 billion in overall spending in $2017 by a fair amount. It is a staggering amount of money and it demonstrates just how hard it is for any other competitors to get in the game. That could explain why Verizon was selling off cloud assets last year. It just couldn’t keep up.
The big five accounted for over 70 percent of spending in Q1. The remaining companies accounted for an additional $7 billion in spending (for a total of $27 billion for the quarter).
Go big or go home
The spending was so high, in fact, it even caught long-time industry watchers like Synergy by surprise. “Our detailed quarterly market tracking has consistently shown strong growth in cloud services, SaaS, hyperscale data center footprint, and spending on public cloud data center hardware, but even so these CapEx numbers took us by surprise. We have long said that this is a game of scale in which most service providers cannot hope to compete; here is some of the clearest evidence yet,” Dinsdale said in a statement.
There are lots of reasons for this growth. We are seeing unprecedented growth from the cloud companies, which require more resources to service their growing customer bases. In addition, we are seeing a growing code of laws forcing companies to comply with data sovereignty policies. This forces the companies to keep data in-country and build datacenters to comply.
What’s more, increased demand means users need computing power closer to where they are to reduce latency. All of this combined is generating ever-increasing demand and the companies have little choice, but to keep building to keep up.
Synergy defines hyperscale data centers as having thousands or even millions of servers in operation. The biggest companies tend to build their own hardware and software because conventional off-the-shelf hardware and software have not been designed to scale to the unique requirements of these organizations.
This is some significant growth though, and from the looks of these numbers, it doesn’t look their thirst for more data centers is going to be quenched anytime soon.
Photo: Dennis van Zuijlekom on Flickr. Used under CC by SA 2.0 license.
