Dell’Oro sounds first warning on data center capex
While U.S. cloud operators such as Amazon, Google, Meta, and Microsoft combined to increase data center capital expenditures (capex) 45% in the second quarter of 2022, according to Dell’Oro, the market research firm also says it expects other operators to cut spending in the near future. Some Chinese and Tier 3 U.S. cloud service providers as well as select enterprise verticals have shown signs of a capex pullback, Dell’Oro says in its most recent Data Center IT Capex Quarterly Report.
"Data center capex attained the highest growth in more than three years, driven by ongoing footprint expansion and adoption of accelerated computing by the U.S. hyperscalers," said Baron Fung, research director at Dell’Oro. "However, growth in other markets was mixed, as some enterprise customers are delaying their data center purchases due to mounting economic uncertainties, while others continue to contend with persistent supply challenges. Nevertheless, double-digit growth in server average selling prices from the transition to new server architectures and higher supply chain costs fueled topline growth for the quarter."
Data center capex growth will “moderate” in all segments in 2023, according to Dell’Oro. Before then, backlog and higher equipment pricing will drive data center capex in the second half of this year. The fact that the Top 4 U.S. cloud service providers are slated to launch services in more than 30 new regions in 2022 should help prop up spending.
Dell’Oro’s Data Center IT Capex Quarterly Report details the data center infrastructure capex of each of the 10 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.
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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.
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