Spending on public cloud IT infrastructure to hit $23.3 billion

The first quarter of 2016 may have shown some softness in hyperscale cloud service provider (CSP) demand for IT infrastructure products for deployment in cloud environments — server, enterprise storage and Ethernet switches — but it’s coming back with a vengeance in the second half, according to the latest forecast from IDC).

The IDC Worldwide Quarterly Cloud IT Infrastructure Tracker, released yesterday, forecasts that total spending on IT infrastructure products for deployment in cloud environments will hit $37.1 billion in 2016, an increase of 15.5 percent. IDC forecasts that spending on public cloud IT infrastructure, in particular, will increase by 18.8 percent in 2016 to $23.3 billion.

“Despite weakness in hyperscale CSP demand for IT infrastructure products in the first quarter, we expect spending on public cloud to increase in the second half of the year,” Natalya Yezhkova, research director, Storage Systems, IDC, said in a statement released yesterday. “Overall, we will continue to see steady growth in demand for public cloud services and, as a result, underlying spending on IT infrastructure by CSPs. The economic and financial volatility we see in some regions will push demand further as increasing sophistication of public cloud offerings allows organizations to fulfill their needs across a growing variety of IT domains while OPEX-oriented pricing models provide some relief to tightening IT budgets.”

[ Related: Big data and analytics spending to hit $187 billion]

The tracker also forecasts 10.3 percent growth on private cloud IT infrastructure, to $13.8 billion. IDC notes the lion’s share of that amount, more than 60 percent, will be contributed by on-premises cloud environments.

Traditional IT infrastructure accounts for majority of spending

Meanwhile, IDC forecasts that spending on IT infrastructure deployed in traditional, non-cloud environments will trend lower in 2016, though spending on cloud infrastructure isn’t ready to overtake it yet. Spending on IT infrastructure for traditional environments will decline by 4.4 percent in 2016 — though it will still account for 63.4 percent of end-user spending on enterprise IT infrastructure.

IDC expects the increased spending on cloud IT infrastructure in 2016 to take place in all regions. And it forecasts investments in public cloud to grow at a faster rate than investments in private cloud IT infrastructure. For cloud environments combined, the biggest spending increase will be on Ethernet switches, which IDC expects to grow at 39.5 percent. It expects server and storage spending to grow at 11.4 percent and 14.2 percent, respectively.

[ Related: Gartner: The IT spending implications of Brexit ]

Long-term, IDC forecasts spending on IT infrastructure for cloud environments will grow at a 13.1 percent compound annual growth rate (CAGR) through 2020, hitting $59.5 billion in 2020, representing 48.7 percent of total spending on enterprise IT infrastructure.

IDC believes spending on non-cloud IT infrastructure will continue to decline over the same period, shrinking by 1.4 percent CAGR.

The research firm also believes spending on public cloud IT infrastructure will continue to outpace spending on private cloud IT infrastructure, noting that spending will grow at 18.8 percent and 10.3 percent CAGR, respectively. In 2020, IDC forecasts public CSPs will spend $38.4 billion on IT infrastructure for delivering services, while spending on private cloud IT infrastructure will reach $21.1 billion.