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Hyperscalers to capture over 50% of data center capacity within five years – Synergy Research

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According to a recent study conducted by Synergy Research Group, hyperscale cloud data centers now make up 37% of all data centers globally, illustrating the significant impact of cloud computing on enterprise infrastructure investment. The research found nearly 900 such facilities around the world, with roughly half being owned and operated by data center operators, while the remainder is in colocation sites.

With non-hyperscale colocation capacity accounting for another 23% of capacity, that leaves on-premise data centres with just 40% of the total,” said the Synergy study.

Five years ago, on-premise data centers had a much larger share, nearly 60%, of total capacity. However, the landscape has shifted, which is evident in the considerable change in enterprise spending on data centers.

In the past, companies were investing over $80 billion annually in their data centers, whereas spending on cloud infrastructure services was around $10 billion. Today, cloud services expenditure has surged to $227 billion in 2022, while data center spending has grown modestly at an average rate of 2% per year.

 

Hyperscalers

Looking ahead, Synergy predicts that over the next five years, hyperscale operators will surpass 50% of all capacity, while on-premise data centers will decline to below 30%. Despite this trend, on-premise data centers are not expected to disappear completely; instead, they will maintain a relatively steady capacity, experiencing a slight annual decline. Colocation’s share of total capacity is also expected to remain stable during this period.

Given all of the excitement over the growth of hyperscale operators and the big push towards enterprises outsourcing datacenter facilities, you might assume that the days of on-premise datacenters are numbered,” said John Dinsdale, chief analyst and research director at Synergy That is not true and the total capacity of on-premise datacenters will remain reasonably steady over the next five years, actually declining by an average of just a fraction of 1% each year.”

Synergy’s research is based on an in-depth analysis of the data center footprint and operations of 19 major cloud and internet service providers, alongside data from more than 230 colocation providers. The rise of hyperscale data centers has been driven by the increasing popularity of consumer-oriented digital services like social networking, e-commerce, and online gaming, leading to a transformative shift in enterprise IT investments.

Image and source credits: Synergy Research Group

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