US and Chinese hyperscale companies dominate global market
23 May 2018 | Editorial
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 2016.
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 centres
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 active.
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 and Google.
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 region.
Across the 20 largest metros, retail colocation accounted for 72% of revenues in the third quarter and wholesale 28%.
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 Group
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