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HomeEnterprise ITCloud ComputingCloud revenue fell below traditional IT in Q4 of 2018: IDC

Cloud revenue fell below traditional IT in Q4 of 2018: IDC

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The vendors revenue from sales of IT infrastructure products including server, enterprise storage, and Ethernet switch for cloud environments, including public and private cloud, grew 28.0% year over year in the fourth quarter of 2018, reaching $16.8 billion. This is 6.9% down compared to the previous quarter.

According to IDC report, the quarterly spending on public cloud IT infrastructure was down 6.9% in Q4 of 2018 compared to the previous quarter but it still almost doubled in the past two years reaching $11.9 billion in 4Q18 and growing 33.0% year over year, while spending on private cloud infrastructure grew 19.6% reaching $5.75 billion.

In 4Q18, quarterly vendor revenues from IT infrastructure product sales into cloud environments fell and once again were lower than revenues from sales into traditional IT environments, accounting for 48.3% of the total worldwide IT infrastructure vendor revenues, up from 42.4% a year ago but down from 50.9% last quarter.

For the full year 2018, spending on cloud IT infrastructure remained just below the 50% mark at 48.4%. IDC said that spending on all three technology segments in cloud IT environments is forecast to deliver slower growth in 2019 than in previous years. Ethernet switches will be the fastest growing at 23.8%, while spending on storage
platforms will grow 9.1%. Spending on compute platforms will stay at $35.0 billion but still slightly higher than expected in IDC's previous forecast.

Top Companies, Worldwide Cloud IT Infrastructure Vendor Revenue, Market Share, and Year-Over-Year Growth, Q4 2018 (Revenues are in Millions)
Company 4Q18 Revenue (US$M) 4Q18 Market Share 4Q17 Revenue (US$M) 4Q17 Market Share 4Q18/4Q17 Revenue Growth
1. Inc $2,820 16.8% $1,991 15.2% 41.6%
2. /New H3C Group $2,047 12.2% $1,558 11.9% 31.4%
3. $1,143 6.8% $1,024 7.8% 11.6%
4. Inspur $950 5.7% $504 3.8% 88.4%
4. Huawei $910 5.4% $555 4.2% 63.9%
ODM Direct $4,631 27.6% $4,176 31.9% 10.9%
Others $4,268 25.5% $3,292 25.1% 29.6%
Total $16,768 100.0% $13,101 100.0% 28.0%
IDC's Quarterly Cloud IT Infrastructure Tracker, Q4 2018

The rate of annual growth for the traditional (non-cloud) IT infrastructure segment slowed down from 3Q18 to below 1% but the segment grew 11.1% quarter over quarter.

For the full year, worldwide spending on traditional non-cloud IT infrastructure grew by 12.2%, exactly as forecast, as the market has started going through a technology refresh cycle, which will wind down by 2019, said IDC.

IDC said that by 2023, it expects that traditional non-cloud IT infrastructure will only represent 40.5% of total worldwide IT infrastructure spending (down from 51.6% in 2018). This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

“The unprecedented growth of the infrastructure systems market in 2018 was shared across both cloud and non-cloud segments,” said Kuba Stolarski, research director,
Infrastructure Systems, Platforms and Technologies at IDC.

“As market participants prepare for a very difficult growth comparison in 2019, compounded by strong, cyclical, macroeconomic headwinds, cloud IT infrastructure will be the primary growth engine supporting overall market performance until the next cyclical refresh. With new on-premises public cloud stacks entering the picture, there is a distinct possibility of a significant surge in private cloud deployments over the next five years.”

All regions grew their cloud IT Infrastructure revenues by double digits in 4Q18. Revenue growth was the fastest in Canada at 67.2% year over year, with China growing
at a rate of 54.4%. Other regions among the fastest growing in 4Q18 included Western Europe (39.7%), Latin America (37.9%), Japan (34.9%), Central & Eastern Europe and
Middle East & Africa (30.9% and 30.2%, respectively), Asia/Pacific (excluding Japan) (APeJ) (28.5%), and the United States (15.5%).

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