Hyperscale operator capex totals $26bn in 2019

31 May 2019 | Natalie Bannerman

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New data from Synergy Research Group shows that hyperscale operator capital expenditure (capex) totalled just over $26 billion in Q1 of 2019.

The new figures brings the spend just below a 2% dip compared with the record-setting levels seen throughout 2018.

The 2018 Q1 figures were boosted by Google's $2.4 billion purchase of Manhattan property, excluding that this purchase, the Q1 capex came in 2% down from the first quarter of 2018.

“After racing to new capex highs in 2018 the hyperscale operators did take a little breather in the first quarter,” said John Dinsdale, a chief analyst at Synergy Research Group. “However, though Q1 capex was down a little from 2018, to put it into context it was still up 56% from Q1 of 2017 and up 81% from 2016; and nine of the twenty hyperscale operators did grow their Q1 capex by double-digit growth rates year on year. We do expect to see overall capex levels bounce back over the remainder of 2019. This remains a game of massive scale with enormous barriers for those companies wishing to meaningfully compete with the hyperscale firms.”

As for hyperscale companies themselves, the numbers broke even, with ten companies seeing year-on-year growth and ten showing a decline. In total, capex for the last four quarters totalled $116 billion, 22% up from the previous four quarters. The top five hyperscale spenders in Q1 were Amazon, Google, Facebook, Microsoft and Apple.Outside of the top five, other leading hyperscale spenders include Alibaba, Tencent, IBM, JD.com and Baidu.

Back in March, Synergy Research Group reported that hyperscale operators have become the fastest growing customer category for colocation providers. Revenue in 2018, for both wholesale and retail colocation, grew much faster than revenues from other service provider customers and from enterprises. The overall colocation market grew by 10% in 2018, while hyperscale operators grew by 24% in the wholesale segment of the market and by 16% in the retail segment.