Data center capex continues to grow despite COVID-19

LONDON (December 4 2020) — Demand for data center services continues to rise despite COVID-19 and its economic impacts, according to Omdia’s Cloud & Colocation Data Center Capex Market Tracker. Data center capex by cloud and colocation service providers is expected reach $180 billion in 2024, growing at a 15.7 percent compound annual growth rate (CAGR) from 2020 through 2024 as service providers work to stay ahead of customer demand.

Cloud and colocation service providers continue to benefit from the sustained secular demand trends already in place, but enterprises will continue to accelerate their digital transformation activities as they mitigate the risk of potential unknown future fallout from the pandemic and its economic impact. 

The greatest portion of total data center capital spending is IT equipment including servers, storage, networking and other devices, which is forecast to be 71.5% of total spend for CY20. Physical infrastructure equipment represents 19.5% and land & building at 9%. 

Alan Howard, principal analyst at Omdia, commented: "Cloud and colocation service providers have been benefactors of increased SaaS and network customer demand from the pandemic response necessitating remote working and educating. Whilst there has been some challenges and delays in data center projects driven by the pandemic, we are not seeing or anticipating a pull-back on investing in the very heartbeat of services delivery, which is the data centers themselves. 

“Based on existing evidence and data, the trajectory of data center capex spending will continue to grow to meet anticipated demand. Spending in each category is not a smooth flow in each period or each year. For example: IT infrastructure equipment spend is impacted by refresh cycles, trade regulations and supply chain issues; physical infrastructure equipment is also impacted by construction cycles and data center space availability as well as IT equipment deployment timing.” 

-ENDS-

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