Hyperscale capex hits $27bn in 'record-breaking' quarter

Hyperscale capex hits $27bn in 'record-breaking' quarter

Hyperscale operators invested $27 billion in capital expenditure in the first quarter of 2018, an increase of more than 80% on 2017.

Capex spend usually tails off in Q1, according to Synergy Research Group who released the figures, but the 2018 Q1 spend was also up 20% on the fourth quarter of 2017, making it a record-breaking quarter.

The top five group of spenders consisted of Google, Microsoft, Amazon, Apple and Facebook, which cumulatively accounted for over 70% of hyperscale capex in the quarter. 

Much of that hyperscale capex went towards building and expanding huge data centres, which have now grown in number to over 420, SRG said. Its 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.

The likes of Alibaba, IBM, JD.com, NTT and Tencent rounded out the top 10 hyperscale spenders in Q1. Spend has more than doubled from Q1 2015, when hyperscale capex was just $12 billion. Total hyperscale capex in 2017 was $74 billion.

“2017 was a standout year for hyperscale capex, but 2018 has started out with some staggering numbers,” said John Dinsdale, a chief analyst and research director at Synergy Research Group. 

“Our detailed quarterly market tracking has consistently shown strong growth in cloud services, SaaS, hyperscale data centre footprint and spending on public cloud data centre hardware, but even so these capex numbers took us by surprise. We have long said that this is a game of scale in which most service providers cannot hope to compete; here is some of the clearest evidence yet.”

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