Data center services demand continues to power through the pandemic, and data center network operators continue to spend to keep pace, according to Omdia. The market research firm states in the latest edition of its Cloud & Colocation Data Center Capex Market Tracker that capex levels among cloud and colocation service providers also should continue to rise, by a 15.7% compound annual growth rate (CAGR) from 2020 through 2024 to reach $180 billion in the latter year.
Sustained secular demand for their services, combined with ongoing digital transformation initiatives among enterprises, will keep the wind in capex sails. "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,” commented Alan Howard, a principal analyst at Omdia.
“Based on existing evidence and data, the trajectory of data center capex spending will continue to grow to meet anticipated demand,” Howard continued. “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.”
Despite these potential constraints, the majority of capex is devoted to IT equipment, including servers, storage, networking, and other devices, and physical infrastructure equipment (see chart above). Omdia expects the IT category to account for 71.5% of total capex spend for this year, with physical infrastructure equipment receiving 19.5%. Land and building outlays will round out capex for the year at 9%.
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.
Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
You can connect with Stephen on LinkedIn as well as Twitter.