Cloud infrastructure sales to drop in 2019 - analyst

IDC says erratic spending from public cloud providers the main contributor

Revenues in the cloud infrastructure market will drop from a stellar 2018, affected by erratic demand from hyperscale service providers, according to IDC.

The analyst has lowered its 2019 revenues forecast to $66.9bn (€59.1bn), down 4.5 per cent from last quarter's forecast.

Vendor revenue from hardware infrastructure sales to public cloud environments in Q1 2019 was also down 13.4 per cent, compared with the previous quarter.

However, there has been an increase in this segment of the market of 8.9 per cent year on year to $9.8bn.

Research VP of infrastructure systems, platforms and technologies at IDC, Natalya Yezhkova, said that the quarterly figures could seem "distorted" by the fact that the final quarters of 2018 enjoyed particularly high growth.

"As the overall IT infrastructure goes through a period of slowdown after an outstanding 2018, the important trends might look somewhat distorted in the short term," she said.

However, IDC pointed to the unpredictable demand from a handful of hyperscale service providers, "whose spending on IT infrastructure tends to have visible up and down swings".

"After a strong performance in 2018, IDC expects the public cloud IT infrastructure segment to cool down in 2019 with vendor revenue dropping to $44.5bn, a 2.2 per cent decrease from 2018," it said.

Meanwhile, spending on private cloud IT infrastructure has showed more stable growth.

In Q1 2019, vendor revenues from private cloud environments increased 16.9 per cent year on year to $4.7bn.

IDC expects spending in this segment to grow 10.1 per cent year on year in 2019.

The analyst claims that the IT infrastructure industry "is at a crossroads in terms of product sales to cloud vs traditional IT environments".

"In Q3 2018, vendor revenue from cloud IT environments climbed over the 50 per cent mark for the first time, but has since fallen below this important threshold," it said.

However, for public cloud channel firms, the longer-term picture looks rosier.

IDC expects that spending on cloud IT infrastructure will "sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond".