The dramatic shift of data center expenditure from on-premises to service provider deployments is continuing in 2016, as use of cloud infrastructure services accelerates. Canalys estimates that worldwide expenditure on cloud infrastructure services reached $8.2 billion in Q1 2016, up 53% year on year. Total spend is forecast to exceed $38 billion in 2016. This includes infrastructure as a service and platform as a service delivered as part of hosted private and public cloud services.
“The push by Amazon, Microsoft, Google and IBM SoftLayer to offer data center capacity to businesses is also having a major impact on the IT industry,” said principal analyst Matthew Ball. Over 50% of servers in 2016 will be shipped to data centers providing cloud infrastructure services. But these are typically low-margin and increasingly white box deals, which is affecting vendors and channel partners that sell compute and storage.