Synergy report: Ultra-large data center company spending over expectations

In the last quarter, hyperscale data center operators spent $26 billion on new infrastructure, a 53% increase from the third quarter of 2017.

According to the latest report from Synergy Research’s ultra-large data center capital expenditures, AWS, Google, Microsoft, Facebook, and Apple are by far the most expensive companies in this area. The “very large-scale data center operators” here refer to large Internet companies with distributed infrastructure around the world that can scale quickly to accommodate growing demand without any additional physical space, cooling or power resources.

According to the report released on Tuesday, the five companies accounted for more than 70% of the ultra-large-scale data center capital expenditures in the third quarter of 2018. Microsoft reportedly increased its spending sharply during the quarter, but spending on the other four companies has shrunk slightly from the previous quarter.

Alibaba Cloud also increased spending in the last quarter. Other high-income Chinese companies include Baidu, JD, and Tencent, while IBM and NTT Communications were also nominated for the Synergy list.

Synergy chief analyst John Dinsdale said that the hyperscale data center business is booming: “In the past four quarters, these companies’ revenues grew by an average of 24% year-on-year, and their capital expenditures are also growing in revenue. increase.”

This means that any other company that wants to compete with mainstream cloud computing providers is almost impossible to achieve this level of magnitude, Dinsdale said. “This creates a huge barrier for companies that want to compete meaningfully with very large data center companies. This is a large-scale competition, with only a few people eligible to participate,” he said.

Among these giants, Google announced several major data center infrastructure projects last quarter, although the cost of these projects may not be included in Synergy’s latest report. For example, Google recently started building a new data center in Singapore and is expanding its existing data center facilities in Chile. In addition, Google will spend $600 million to expand its data center in South Carolina. Just this week, Google said it will spend $690 million to build a brand new data center in Denmark.

In addition, Amazon announced new projects in the last quarter, expressing its hope to build a new data center in Talat, Ireland.

Just a few days before the announcement of this report, Synergy just released data related to revenue from public cloud providers. AWS continues to dominate the market. Microsoft ranks second in all major regions except the Asia Pacific, in Asia Pacific Alibaba. Ranked second.