Thanks in part to record expenditures in the fourth quarter, spending on data centers by hyperscale operators end up 11% better in 2019 than 2018, reports Synergy Research Group. That growth well exceeded the amount of capex growth exhibited during 2019, which the market research firm estimates at 1%.
Data center related spending for the final quarter of 2019 came in at well over $32 billion, slightly better than the previous record set in the year-ago quarter, says Synergy Research. Amazon, Google, Microsoft, Facebook, and Apple were the biggest hyperscale spenders last year, and 2019 capex growth at Amazon, Microsoft, and Facebook was particularly strong, according to the market researchers. Apple’s capex declined significantly, however, which affected the overall total. Other leading hyperscale spenders last year included Alibaba, Tencent, IBM, JD.com, Baidu, and Oracle.
It’s clear much of hyperscale capex went towards building, expanding, and equipping data centers, points out Synergy Research. The surge led the number of hyperscale data centers to grow to 512 by year’s end.
“As expected there was a significant boost in hyperscale operator capex in the second half of 2019, which helped to counter a relatively soft start to the year. Most notable was that annual spending on data centers grew at a double-digit rate despite total capex being somewhat flat,” said John Dinsdale, a chief analyst at Synergy Research Group.
“How will coronavirus impact this trend going forwards? While there are many unknowns, what is clear is that the hyperscale operators generate well over 80% of their revenues from cloud, digital services, and online activities. The radical shifts we are seeing in social and business behavior will actually provide some substantive tailwinds for many of these businesses. These hyperscale firms are much better insulated against the current crisis than most others and we expect to see ongoing robust levels of capex,” Dinsdale added.
The company’s data is based on analysis of the capex and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking, and e-commerce. Together these 20 companies generated 2019 revenues of almost $1.4 trillion, up 13% from 2018.