23 May 2018
Capital expenditure by the hyperscale data centre companies is growing fast, reports Synergy Research Group. Five companies dominate the market, with 70% of spending, and the whole hyperscale business is focused on the US and China
Hyperscale capex hits $75bn a year and $22bn in last
quarter of 2017
Capital expenditure by hyperscale operators totalled $22
billion in the fourth quarter of last year and reached almost
$75 billion for the full year, representing 19% growth over
Much of that hyperscale capex goes towards building and
expanding huge data centres, which have now grown in number to
400, according to Synergy Research Group.
The top five spenders are Google, Microsoft, Amazon, Apple
and Facebook, which in aggregate account for over 70% of Q4
hyperscale capex. Across all hyperscale operators, 2017 capex
equated to just over 7% of total revenues, although the ratio
varies greatly by company, from a low of 2% to a high of 17%
depending on the nature of the business.
The research is based on analysis of the capex and data
centre footprint of 24 of the world’s major cloud
and internet service firms, including the largest operators in
IaaS, PaaS, SaaS, search, social networking and e-commerce.
On average during 2017, the top five of Google, Amazon,
Microsoft, Apple and Facebook spent well over $13 billion a
quarter in total, with capex growth particularly strong at
Amazon and Facebook.
Outside of the top five, other major hyperscale spenders
include 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,
now part of Verizon.
US accounts for 44% of
world’s 390 hyperscale data
Just six countries are home to 74% of the
world’s hyperscale data centres, with the US alone
accounting for 44% of the total.
According to Synergy Research Group there were just over 390
hyperscale data centres at the end of 2017, after the number
increased rapidly thanks to openings in China, India and
Malaysia at the end of the year. The mid-year period saw a
flurry of openings in Germany, the UK, Singapore, Australia,
Brazil and the US, with Google being particularly
Synergy’s numbers show that the US accounts for
44% of the total, followed by five other countries –
China with 8%, Japan and the UK with 6% each, then Australia
and Germany with 5% each, making a total of 74%.
The research is based on an analysis of the data centre
footprint of 24 of the world’s major cloud and
internet service firms, including the largest operators in
SaaS, IaaS, PaaS, search, social networking and e-commerce.
On average each of the 24 firms had 16 data centre sites.
The companies with the broadest data centre footprint are the
leading cloud providers – Amazon/AWS, Microsoft, IBM
Oracle and Alibaba also have a notably broad data centre
presence. The remaining firms tend to have their data centres
focused primarily in either the US (Apple, Twitter, Facebook,
eBay, LinkedIn, Yahoo) or China (Tencent, Baidu).
Just 20 metros generate 59% of
worldwide colocation revenues
Five metro areas – London, New York, Shanghai,
Tokyo and Washington DC – are home to 26% of the
worldwide retail and wholesale colocation revenues.
And only 15 more locations account for the next 23%,
implying that just 20 metro areas account for 59% of revenues,
according to Synergy Research Group.
Over the last four quarters colocation revenue growth in the
top five metros outstripped growth in the rest of the world by
two percentage points, so the worldwide market is slowly being
concentrated more in those key metro areas.
The top 20 metros include 10 in North America, four in
Europe, the Middle East and Africa and six in the Asia-Pacific
Across the 20 largest metros, retail colocation accounted
for 72% of revenues in the third quarter and wholesale
Equinix was the market leader in the third quarter by
revenue in eight of the top 20 metros. Digital Realty would be
the leader in five more if a full quarter of the acquired
DuPont Fabros operations were included in its numbers. Top 20
metros with annualised growth rates of 15% or more, measured in
local currencies, were Shanghai, Beijing, Hong Kong and
Washington/Northern Virginia. All four saw strong growth in
both the retail and wholesale segments of the market.
All sources: Synergy Research Group.Adapted
with permission from a number of reports by Synergy Research