Datacentre market slows as enterprise demand slumps

Data from Synergy Research Group suggest end of growth surge for datacentre market as enterprise spending shrivels

The datacentre market began to lose momentum in Q1 as the COVID-19 crisis halted hardware spending in the enterprise space.

According to market watcher Synergy Research Group, hardware and software spending declined by two per cent globally in Q1 to $35.8bn.

The Q1 decline was driven by a sharp drop in enterprise and service provider spending, which fell by four per cent during the quarter to $22.5bn, according to Synergy Research.

Public cloud spending, however, helped abate the decline, growing by three per cent. The firm claims that the COVID-19 pandemic has had "little impact" on the public cloud datacentre infrastructure market.

It follows several consecutive quarters of growth in datacentre spending. Synergy claims that datacentre hardware and software spending grew by two per cent in 2019, with public cloud up by seven per cent and traditional datacentre spending down by seven per cent.

"Cloud service revenues continue to grow by almost 40 per cent per year, enterprise SaaS revenues are growing by almost 25 per cent, search/social networking revenues are growing by over 15 per cent, and e-commerce revenues are growing by over 20 per cent - all of which are helping to drive growth and increased spending on public cloud infrastructure," said John Dinsdale, a chief analyst at Synergy Research Group.

"Notably, most of these services are either little impacted by COVID-19 or may be stimulated by changed enterprise and consumer behaviour. On the other hand, many enterprises have been negatively impacted by the pandemic resulting in increased pressure on capital budgets and more impetus on shifting workloads to public cloud providers."

Microsoft led the enterprise space by spending during the quarter, according to Synergy, followed by Dell, HPE, Cisco and VMware.

In the public cloud space, Dell was the largest single company in the market, second only to the cumulative might of the market's ODM vendors. Microsoft, Inspur and Cisco are also in the top five.

Synergy claims Dell is leading the market in both servers and storage, while Cisco dominates the networking segment. Microsoft meanwhile holds a leading position in the server OS and virtualisation applications space.