Menu
Tech giants spent nearly $75B on hyper-scale infrastructure last year

Tech giants spent nearly $75B on hyper-scale infrastructure last year

Amazon, Apple, Facebook, Google and Microsoft were the top five spenders

The capital expenditure (CAPEX) of hyper-scale cloud operators came to US$75 billion for 2017, with US$22 billion in the fourth quarter, a 19 per cent growth over 2016.

Amazon, Apple, Facebook, Google and Microsoft accounted for more than 70 per cent of Q4 hyper-scale capex, making them the top five spenders, according to data from Synergy Research Group.

In fact Synergy Research Group said the top five spenders accounted for more than US$13 billion per quarter.

Synergy analysed the capex and data centre footprint of 24 of the world’s major cloud and internet service firms, including the largest operators in Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), search, social networking and e-commerce.

Synergy noted that Amazon and Facebook showed strong capex growth in the past year. According to Synergy, most of the hyper-scale capex is invested in expanding "huge" data centres.

There are currently 400 of these data centres, according to the research firm. In a research from December 2016, Synergy said that the number of large data centres operated by hyper-scale providers hit the 300 mark.

At the time it estimated the 400 mark would be achieved by the end of 2018 but it said it has already happened.

“Over the last four years we have seen many companies try and fail to compete with the leading cloud providers," Synergy Research Group chief analyst and research director, John Dinsdale, said. "The capex analysis emphasises the biggest reason why those cloud providers are so difficult to challenge."

The other hyper-scale spenders that make the top ten list are Alibaba, IBM, Oracle, SAP and Tencent.

Among these five, Alibaba capex more than doubled in 2017, while growth at both Oracle and SAP was also above average.

Other notables outside of the top ten include Baidu, eBay, JD.com, NTT, PayPal, Salesforce, Yahoo Japan and Yahoo/Oath.

Capex was only responsible for seven per cent of total revenues across all hyper-scale operators. Synergy explained that the ration can vary by company from two per cent to 17 per cent.

“Can you afford to pump at least a billion dollars a quarter into your data centre capex budget? If you can’t, then your ability to meaningfully compete with the market leaders is severely limited. Of course factors other than capex are at play, but the basic financial table stakes are enormous.”


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags MicrosoftGoogleFacebookAppleamazonhyper-scale

Featured

Slideshows

EDGE 2018: Kiwis kick back with Super Rugby before NZ session

EDGE 2018: Kiwis kick back with Super Rugby before NZ session

New Zealanders kick-started EDGE 2018 with a bout of Super Rugby before a dedicated New Zealand session, in front of more than 50 partners, vendors and distributors on Hamilton Island.​

EDGE 2018: Kiwis kick back with Super Rugby before NZ session
EDGE 2018: Kiwis assess key customer priorities through NZ research

EDGE 2018: Kiwis assess key customer priorities through NZ research

EDGE 2018 kicked off with a dedicated New Zealand track, highlighting the key customer priorities across the local market, in association with Dell EMC. Delivered through EDGE Research - leveraging Kiwi data through Tech Research Asia - more than 50 partners, vendors and distributors combined during an interactive session to assess the changing spending patterns of the end-user and the subsequent impact to the channel.

EDGE 2018: Kiwis assess key customer priorities through NZ research
Show Comments