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Data Center And Cloud Demand Surge To IT Infrastructure Trillions Market

2020/6/3 12:23:00 0

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Despite the challenges posed by the new crown pneumonia epidemic in the data center as well as other industries, such as the construction, daily operation and supply chain of the data center, the alienation measures during the epidemic also led to a surge in demand for telecommuting, streaming video, online shopping and online education, thereby driving the growth of the data center and cloud computing market. This also makes them among the few industries that are not much affected by the epidemic.

The first quarter of 2020, Amazon AWS, Microsoft Azure, Ali cloud and Google cloud and other major cloud providers, as well as Intel, NVIDIA and other chip manufacturers' data center business grew significantly. The impact of the estrangement measures during the epidemic period, as well as the anticipation after the outbreak, makes the growth trend of the data center and cloud computing market expected to continue after the epidemic has stabilized gradually.

"Many data center service providers recorded strong growth in the first quarter of 2020." "They believe that compared with 2019, the demand for their services will be out of order in 2020 and 2021," Harish S., chief analyst at Arizton, an analyst at the data center industry, told the twenty-first Century economic report.

Harish S. believes that the data center and cloud computing market undoubtedly have a positive impact on the new crown pneumonia epidemic. But at the same time, the epidemic also affected the operation and expansion of the existing data centers. In many cities, new projects were forced to be suspended. In addition, the impact of the supply chain is likely to show up in the second quarter.

Cloud and data center demand surge

"People are separated from each other in the physical world, but they are more closely linked in the virtual world." Referring to the impact of the epidemic and alienation measures, Ericsson President Zhao Juntao said in an interview at the end of 3, including the twenty-first Century economic report, "this connection is the network, especially the mobile network."

Jonathan Hjembo, senior manager of data center research at TeleGeography, a telecommunications market research and consulting firm, points out that these interconnections depend on data centers. In its recent article, the company said the demand for data centers is still strong, especially in the vertical field. "Think about online video, games and cloud." Hjembo said, "the demand for education for cloud platforms is also surging." He said that data center service providers realized that revenue growth in the field will become normal in the near future.

Crushman & Wakefield, a real estate service and consultancy, released a report on the recovery of the new crown pneumonia epidemic in April: China's data center is expanding rapidly. The company believes that the utilization rate of China's Internet is surging, and in the near future, with the rapid development of cloud storage, big data, artificial intelligence and 5G, the demand for data and information processing platform of Internet data center will also increase.

After the outbreak, this demand is likely to continue. IBM said recently that China, which was the first to be affected by the epidemic, has entered the stage of normalization of epidemic prevention and control. With the restart of the economic engine, enterprises and institutions of different sizes are facing new changes. Rapid and large-scale digitization is being integrated into work and life.

"The new crown pneumonia epidemic has a positive impact on the data center and the cloud computing market." Arizton chief analyst Harish S. told the twenty-first Century economic news reporter that the digitalization of enterprises makes telecommuting possible, and this is largely driven by the epidemic.

In fact, the demand for online office and e-commerce has surged, which has made the business of cloud giants not only affected by the epidemic, but in the background of the trend of decline caused by the slowdown of cloud transformation in large enterprises.

Earnings data showed that the first quarter revenue of Amazon AWS grew by 33% compared with the same period last year, while Microsoft intelligent cloud department revenue grew by 27% year-on-year, of which Azure revenue grew by 59%; Alibaba's cloud computing business grew by 58% over the same period; Google's cloud computing revenue also increased significantly by 52% over the same period last year.

In addition, cloud service providers are stepping up their response to the surge in demand. Data released by Canalys, an industry analyst, showed that in the first quarter of 2020, global cloud infrastructure services increased to a record high of $34%, an increase of $31 billion. The agency believes that this is mainly due to the surge in demand caused by telecommuting.

The data center business of chip manufacturers is also growing rapidly. For example, CPU giant Intel's data center business revenue reached $7 billion, an increase of 43% over the same period last year, becoming the most important support for the company's growth. GPU giant NVIDIA's data center business revenue surged 80% to $1 billion 140 million over the same period.

It is worth mentioning that this is the first time that the single quarter revenue of NVIDIA's data center business has exceeded $1 billion. In the past year or more, NVIDIA has acquired end-to-end network company Mellanox and Cumulus, a network software company, to improve its layout in the data center.

Trillions of market opportunities

Jen-hsun Huang, CEO, believes that the work of data centers has become increasingly diverse and complex, and that cloud will be the biggest opportunity for the computer industry.

"In the future, the computing unit will be the entire data center." Jen-hsun Huang recently told the media, including the twenty-first Century economic report, at the GPU summit. He believes that in the past quite a long period of time, the basic computing units are CPU, followed by "CPU plus GPU"; but in the future, data center computing will become the norm, and the data center will also become the most basic computing unit.

"Such a data center requires three types of servers, storage servers, universal CPU servers, and an accelerated computing server that handles most operations." In explaining recent acquisitions, Jen-hsun Huang said, "they need to be (end to end) network connection, which is the role of Mellanox and software is Cumulus." He pointed out that the future of NVIDIA will be a company aiming at "data center magnitude" rather than "personal computer scale" or "server level".

Jen-hsun Huang pointed out that the data center and cloud computing market has reached almost 100 billion (US $, the same below) level, and is still growing by 40% per year. The expansion of the entire IT infrastructure area can further point to a trillion level market.

Harish S. recognizes the scale of the market. "There is no doubt that the data center and cloud services market has exceeded 100 billion, and we expect that it will continue to grow rapidly in the next few years." Harish S. pointed out that the investment in the data center market is still strong, and the investment in the IT related infrastructure and support facilities in the world is still more than 100 billion dollars a year. If it is included in cloud computing, this figure will be even larger. "If the cloud continues to account for the largest IT expenditure of enterprises and institutions, its annual growth rate will be at least 20%." Arizton data show that in 2019, there were at least 350 data center expansion projects in the world, and 250 projects that would be launched in 2020-2024 years were tracked.

Despite its emergence more than 10 years ago, the large-scale development and use of cloud computing has been gradually realized in the past three years. "Generally speaking, the cloud market is maturing." Harish S. said that migration from its own infrastructure to cloud and escrow facilities had brought strong driving force to the market, and penetration of the Internet was also one of the main drivers. However, in the next 5 years, the main driving force for cloud and data center market development will be the demand for local data processing and edge computing brought about by 5G deployment.

From the point of view of data center investment, China and the United States are undoubtedly the two leading markets. Harish S. points out that in China, the size of the data center market, including IT and other supporting infrastructure, has reached US $20 billion in 2019. Besides, China's telecom operators will also invest in edge computing facilities in the next 5 years.

"In addition to these leading countries, investment in data centers is also growing steadily in mature markets including Germany, the United Kingdom, Holland and Singapore. However, the recent surge in investment in India and Indonesia will also be one of the main drivers of global market growth. " Harish S. indicates.

The adverse effects of the epidemic are limited.

However, analysts' expectations for data centers and cloud services markets, as well as the impact of the epidemic are not exactly the same. For example, a report released last month by Gartner, an industry analyst, showed that global IT investment is expected to decline by 8% to 3 trillion and 400 billion US dollars in 2020 compared with the previous year, due to the impact of the new crown pneumonia and the global economic downturn. The investment in the data center system will be reduced by 9.7% to $191 billion 200 million. However, public cloud services will become a "bright spot". It is expected to grow by 19% in 2020, and investment in cloud based online conferences is expected to grow by 24.3%.

Gartner believes that although some long-term cloud based transformation projects may be shelved in 2020, overall, the agency's projections of cloud related investment levels in 2023 and 2024 are expected to be realized in 2020.

Harish S. points out that despite the surge in demand for data centers and cloud computing, the epidemic has had an adverse effect on the operation and expansion of existing data centers, and in many cities, new projects in data centers have been suspended. In addition, the negative impact of supply chain may also appear in the second quarter.

TeleGeography's recent interview with a number of data center operators and industry experts shows that the surge in global demand has made data centers unable to stop operations during the epidemic like other industries and have to maintain their day-to-day operations. To this end, operators have taken the same social distance in the workspace, forced use of personal protective equipment such as masks and gloves, and preventive measures such as temperature detection and periodic disinfection. On the supply chain, most of the operators involved in the above interview have not yet pointed out that their supply chain has been interrupted. "In order to prevent plant interruption or disruption of transportation from affecting equipment delivery, some manufacturers have tried to find some flexible ways to solve these challenges."

TeleGeography senior manager Jona than Hjembo pointed out that although construction works slowed down or pause in some areas, they were not all. For example, construction projects in some parts of Europe have been completely suspended, and pre construction procedures including approval permission have been suspended. In Singapore, construction has also been suspended. However, at least one project in Thailand is still under construction. Only measures such as shortening working hours and observing curfew are taken. "On the whole, we do not think that the data center industry will have the same negative impact as other industries." Hjembo said, "in the long run, this crisis will strengthen the hosting and deployment of the network in order to provide a more robust service in a world increasingly dependent on network connectivity."

According to Harish S., data center service providers believe that demand for their services will exceed normal in 2020 and 2021 compared with 2019. In addition, as many enterprises have indicated that the alienation measures, including telecommuting, are likely to last at least until the end of 2020, Arizton believes that the growth of cloud service demand will continue throughout 2020.

"If the spread of the new crown pneumonia epidemic is significantly weakened at the end of 2020, the demand for cloud and data centers will not suddenly weaken in 2021." Harish S. said, "enterprises and institutions will continue to move their operations to the cloud in the next three years, which will increase the current growth rate of all major cloud services (IaaS, PaaS and SaaS) to about 20%."

 

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