Cloud service spend outpaces private data centre investment

The market for ‘cloud native’ networking solutions looks set for take off, with new figures showing that, for the first time, enterprises are spending more on cloud infrastructure services than they are on hardware and software for their private data centres.

Recent market data from Synergy Research Group, which provides market data for the cloud and data centre sectors, revealed that total spend last year on cloud infrastructure services reached $97 billion, up 38 per cent on the previous year, with private data centre spend rising only one per cent to $93 billion.

Synergy Research Group found that more than eight out of ten businesses consider the cloud to be either important or crucial to their digital strategies. It said the trend towards more flexible working was underpinning a surge in cloud adoption well before the COVID-19 pandemic helped to take it to the next level.

While Amazon and Microsoft remain market leaders in the cloud service market, others are also performing strongly. Alibaba Group, announcing results last week for its fiscal year ended March 31, 2020, said it was performing strongly despite the economic effects of the pandemic, thanks in a large measure to its cloud success.

“Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “The pandemic has fundamentally altered consumer behaviour and enterprise operations, making digital adoption and transformation a necessity. We are well positioned and prepared to help large and small businesses across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal.”

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