The COVID-19 pandemic has effect negatively several industry verticals hard over the past five months, including brick-and-mortar retail, travel, hospitality and small-to-medium-sized business. A report by Dell’Oro Group said data center capex, which includes capex for servers and other data center infrastructure equipment, growth will be a mixed bag depending on the customer segment. The cloud accounts reached for more than 60% of the worldwide data center capex. The cloud will continue to flourish when compared to enterprise/on-premise data center deployments.
The increase in cloud accounts
“The COVID-19 pandemic and the ensuing recession may have the long-lasting effect of accelerating the permanent migration of certain industries and workloads to the cloud,” according to Dell’Oro.
Dell’Oro said the top-four U.S. cloud service providers — Amazon, Facebook, Google, and Microsoft — were well-positioned to continue their momentum of expansion over the next five years. Servers will continue to be consolidated in fewer mega cloud data centers that could potentially provide greater capacity than the same number of servers spread out across thousands of enterprise data centers.
Those top four U.S. cloud service providers have been prolonging the life of their servers to lower server depreciation expenses while maintaining the reliability of their server fleets. In 2019, Arista Networks saw an impact on its fourth-quarter earnings due to declining switch revenue from an unnamed cloud provider. Intel server processor refresh cycles have historically influenced IT spending.
“While the major cloud service providers typically ramp server capacity outside of the processor refresh cycle, the upcoming Intel 10 nm Whitley server platform refresh due later this year could generate an uplift on server spending. Viable alternatives to Intel processors, AMD EPYC and ARM, for server and storage system applications are starting to materialize in certain markets,” according to Dell’Oro Group.Stay tuned for up-to-date Data Center News