Datacenter capex to reach $180 billion in 2024: Omdia

Datacenter Capex by cloud and colocation service providers is expected to reach $180 billion in 2024 at a compounded annual growth rate (CAGR) of 15.7% during 2020-24 as service providers ramp up their efforts to meet customer demands, said market research agency Omdia’s Cloud & Colocation Data Center Capex Market Tracker report.

IT equipment including servers, storage, networking, and other devices will account for the largest portion of data center Capex, which is forecast to be 71.5% of the total spending for CY20, followed by physical infrastructure equipment (19.5%), and land and building (9%).

Cloud and colocation service providers will continue to benefit from the sustained demand trends in the market, but enterprises will accelerate their digital transformation to mitigate risks from the pandemic and consequent economic impact, the report said.

“Cloud and colocation service providers have been benefactors of increased SaaS and network customer demand from the pandemic response necessitating remote working and educating,” said Alan Howard, principal analyst at Omdia.

Howard added that Omdia does not expect any pull-back in investments in data centers despite challenges and delays and data center projects.

“Based on existing evidence and data, the trajectory of data center Capex spending will continue to grow to meet anticipated demand. Spending in each category is not a smooth flow in each period or each year,” he added.

For example, IT infrastructure equipment spend is impacted by refresh cycles, trade regulations, and supply chain issues; physical infrastructure equipment is also impacted by construction cycles and data center space availability as well as IT equipment deployment timing, Howard concluded.