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Enterprise Cloud Spending Vaults Past Datacenter Spend in 2020

It took 10 years of steady growth for enterprises to spend the same amount on cloud services as they did on their on-premises datacenter hardware and software.

But it happened in 2019. And then in 2020, cloud service spending left datacenter-related spending in the dust.

That's according to new data this month from Synergy Research Group.

The Reno, Nev.-based research firm found cloud infrastructure services spending grew 35 percent in 2020 to almost $130 billion. By comparison, enterprise spending on datacenter hardware and software, largely stagnant for a decade, fell 6 percent to $89 billion.

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"Over the last ten years we have seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, resulting in an ever-growing need for data center capacity. However, 60% of the servers now being sold are going into cloud providers' data centers and not those of enterprises," said John Dinsdale, chief analyst at Synergy, in a statement.

In 2019, spending on the two categories was relatively even in the mid-$90-billion range, with cloud service spending slightly ahead.

According to Synergy's data, average annual spending growth over the last decade was 2 percent for datacenters and 52 percent for cloud services, which included IaaS, PaaS and hosted private cloud.

Within cloud over the decade, Dinsdale said the segments with the highest growth rates were PaaS categories, especially database, IoT and analytics.

Posted by Scott Bekker on March 26, 2021