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Cloud Digestion Expected in Second Half 2020

REDWOOD CITY, Calif. – September 15, 2020 – According to a recently published report from Dell’Oro Group, the trusted source for market information about the telecommunications, networks, and data center IT industries, Cloud data center capex is 17 percent higher year-over-year (Y/Y) in 2Q 2020 as the Cloud service providers expanded server capacity. Meanwhile, Enterprise IT spending remains depressed.

“The major U.S. and China-based Cloud service providers have accelerated expansion of server capacity to meet the demands of remote work and learning,”said Baron Fung, Research Director at Dell’Oro Group. “However, signs of a digestion cycle of lower growth in the second half 2020 may be imminent as the recent build-up is potentially leading to Cloud capacity and component inventories in excess of demand,” explained Fung.

Additional highlights from the 2Q 2020 Data Center Capex Quarterly Report:

  • The Top 10 Cloud service providers projected to return to double-digit Y/Y growth in 1H 2021.
  • Worldwide Server revenue grew 10 percent Y/Y, driven by 1.3 million units of white box servers to the Cloud.
  • Enterprise data center capex declined 7 percent Y/Y.

About the Report

Dell’Oro Group’s Data Center Capex Quarterly Report details the data center infrastructure capital expenditures of each of the ten largest Cloud service providers, as well as the Rest-of-Cloud, Telco, and Enterprise customer segments. Allocation of the data center infrastructure capex for servers, storage systems, and other auxiliary data center equipment is provided. The report also discusses market trends, drivers of the leading Cloud service providers’ capex growth during the quarter, and the outlook for the next year. To purchase this report, please contact us at dgsales@delloro.com.

About Dell’Oro Group

Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.

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