Hyperscale capex exceeds $149 billion

Hyperscale capex exceeds $149 billion

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Capital expenditure from hyperscale operators has reached a new, record level, according to the latest data published by Synergy Research Group.

The report found that capex reached $38 billion in the first quarter – up 31% from last year – taking the total figure for the last four quarters to more than $149 billion. This compared to a total of to $121 billion in the previous four quarters, with the steep rise attributed to the pandemic.

Demonstrating the influence of the pandemic, the total for 2019 stood at $26 billion. A new hyperscale capex record was also set in January .

John Dinsdale, a chief analyst at Synergy Research Group explained: "For hyperscale operators the pandemic proved to be more of a stimulus to growth rather than a barrier. Over the last four quarters we continued to see extremely strong growth in revenue, capex and data centre spending.

“It is interesting to compare their fortunes with other types of major service provider around the world. As hyperscale capex levels keep on setting new records, it is in stark contrast with telcos whose capex has essentially been totally flat for five years now, mirroring their inability to grow overall revenues. Given the ongoing growth in service revenues for hyperscalers and the ever-increasing need for a larger global data center footprint, we are forecasting continued double-digit growth in hyperscale capex for several years to come.”

It comes as little surprise that the biggest spenders were Amazon, Microsoft, Google and Facebook. However, the next group comprised Apple, Alibaba and Tencent.

Among the largest hyperscalers, capex growth at Amazon and Microsoft was particularly strong, while Google spending dropped off a little and Apple’s capex bounced back a bit in the last two quarters. Facebook, Alibaba and Tencent all continue to ramp up their spending. Outside of the top seven, other leading hyperscale spenders include IBM, NTT, Oracle, JD.com, Twitter and Baidu.

Meanwhile in colocation, the market is expected to grow at a compound annual growth rate (CAGR) of 15.23% between 2020 and 2024. Data published last week by Technavio Research found that it is likely that the global market will grow by $33.09 billion over the same period.

Additional research from Synergy adds that 68% of worldwide retail and wholesale colocation revenues are concentrated in just 30 metro areas.

The top five metros are Washington, Tokyo, London, Shanghai and New York, which in aggregate account for 26% of the worldwide market. In Q1 Shanghai surpassed New York for the first time, due to it being one of the highest growth major metros. The next 25 largest metro markets account for another 42% of the market. These top 30 metros include 14 in North America, ten in the APAC region, five in EMEA and one in Latin America


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