Cloud Computing Is To Reach A New All-Time High in 2022

In 2022, investment in traditional IT equipment for data centers will finally be surpassed by spending on shared cloud IT infrastructure. With corporate customers spending $18.3 billion on cloud computing and storage infrastructure in the first quarter of 2022, up 17.2%  year over year, spending on cloud services is likely to reach another critical tipping point.

An illustration of cloud computing on a blue background with white letters.

Budgets for both dedicated and shared cloud infrastructure are included in the total. Yet, spending on shared cloud infrastructure, which accounted for $12.5 billion (68%) of the total, represents a significant growth driver. Additionally, that subcategory increased by 15.7% as compared to Q1 2021.

IDC has been keeping tabs on how much money is being spent on traditional data center computing, storage, and IT infrastructure in public clouds from companies like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others like Digital Ocean. The premier global market intelligence firm anticipates shared cloud infrastructure spending to surpass non-cloud spending for the first time in 2022 due to rising demand for shared cloud spending in particular.

Although not as positive as it is for cloud providers, the outlook for non-cloud IT infrastructure providers is still good. Spending on non-cloud infrastructure increased this quarter year over year to $14.8 billion, up 9.8%. It was the sixth quarter in a row that growth occurred.

IDC doesn’t give a picture of the revenue distribution among public cloud providers, but researcher Canalys recently stated that AWS garnered 33% of the $53.5 billion in worldwide cloud infrastructure spending in Q4 2021, followed by Azure with 22% and Google Cloud with 9%. The remaining 36% was taken by other suppliers.

Since the pandemic started in March 2020, spending on cloud infrastructure has increased as businesses have expedited their digital transitions. With the exception of a 1.9% year-over-year dip in Q2 2021, spending has increased for seven straight quarters starting in Q3 2019. The largest year-over-year growth was in Q2 2020, at 38.4%. The amount spent on cloud infrastructure in Q4 2021 increased by 13.5% year over year to $21.1 billion.

The market for non-cloud expenditure is still quite large and is predicted to increase during the whole year, albeit considerably more slowly than cloud spending.

IDC predicts that spending on cloud infrastructure would increase by 22% in total for the entire year of 2022 to $90.2 billion. It states that this is the biggest yearly growth rate since 2018. At the same time, it is anticipated that spending on conventional IT infrastructure would increase 1.8% to $60.7 billion.

Only a portion of the increase in cost may be attributed to the increased use of infrastructure offered via the cloud. Inflation and the slow but steady improvement of the world’s clogged supply chains and logistical networks are further significant causes.

IDC anticipates yearly growth in cloud infrastructure investment to range between 20 and 25% in China, the US, Western Europe, and Asia Pacific/Japan. Speeding in Central and Eastern Europe is predicted to decrease by 54% in 2022 as a result of Russia’s invasion of Ukraine.

Between 2021 and 2026, the analyst anticipates that expenditure on computing and storage cloud infrastructure would expand at a compound annual growth rate (CAGR) of 14.5%. It projects that spending will amount to $145.2 billion in 2026, making up 69.7% of all expenditures on computing and storage infrastructure. Spending on non-cloud infrastructure is anticipated to increase at a CAGR of 1.2% and reach $63.1 billion in 2026.

IDC also examines the expenditure of managed service providers, cloud service providers, and digital service providers, which together make up 55.3% of IT infrastructure investment. In Q1 2022, this group invested $18.3 billion, or 14.5% more than the previous quarter, in computer and storage infrastructure.

In Q1 2022, non-service providers’ spending increased 12.9% year over year, the largest rise in 14 quarters. Service providers will spend $89.1 billion on IT infrastructure in 2022, up 18.7% over the previous year.