Vendor revenue from sales of infrastructure products (server, storage, and Ethernet switch) for cloud IT, including public and private cloud, grew by 3.9% year over year to $6.6 billion in the first quarter of 2016 (1Q16) on slowed demand from the hyperscale public cloud sector, according to the IDC.
Total cloud IT infrastructure revenues climbed to a 32.3% share of overall IT revenues in 1Q16, up from 30.2% a year ago. Revenue from infrastructure sales to private cloud grew by 6.8% to $2.8 billion, and to public cloud by 1.9% to $3.9 billion.
In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased by 6.0% year over year in the first quarter, with declines in both storage and servers, and growth in Ethernet switch. Ethernet switch also showed strong year-on-year growth in both private and public cloud, 53.7% and 69.4%, respectively.
Storage grew 11.5% year over year in private cloud, but declined 29.6% in public cloud. Conversely, server declined 1.1% in private cloud and grew 8.7% in public cloud.
“A slowdown in hyperscale public cloud infrastructure deployment demand negatively impacted growth in both public cloud and cloud IT overall,” said Kuba Stolarski, research director for Computing Platforms at IDC.
“Private cloud deployment growth also slowed, as 2016 began with difficult comparisons to 1Q15, when server and storage refresh drove a high level of spend and high growth. As the system refresh has mostly ended, this will continue to push private cloud and, more generally, enterprise IT growth downwards in the near term. Hyperscale demand should return to higher deployment levels later this year, bolstered by service providers who have announced new datacenter builds expected to go online this year. As the market continues to work through this short term adjustment period, with geopolitical wild cards such as Brexit looming, end-customers’ decisions about where and how to deploy IT resources may be impacted. If new data sovereignty concerns arise, service providers will experience added pressure to increase local datacenter presence, or face potential loss of certain customers’ workloads,” Stolarski added.
From a regional perspective, vendor revenue from cloud IT infrastructure sales grew fastest in the Middle East and Africa (MEA) at 25.9% year over year in 1Q16, followed by Western Europe at 20.6%, Asia/Pacific (excluding Japan) at 18.5%, Japan at 17.7%, and Canada at 9.5%. Latin America declined 21.2% year over year, while the United States declined 4.1% and Central & Eastern Europe fell just 0.1%.