It takes a certain type of person to be aware of how the rhetoric with cloud storage has shifted. Whether or not you’d be aware of how the narrative shifted from where the technology would quickly replace the entire need for physical storage to one that now promoted smarter and more capable physical data storage would depend on what you do for work or where your interests lie. We have talked about data center colocation in a number of previous blog entries here, so we don’t need to go on too much more about the role of that in the revamping of cloud data infrastructure.
As is the case with everything, budgetary constraints have factored into this as so many businesses and organizations came to terms with just how much it was going to cost to move ALL of their data into the cloud, no matter how reliable or safe the procedure was going to be. This and many other factors were the ones that came together to push advancement and investments into data center colocation, and in truth most people would say that – currently at least – the mix between fully-cloud storage and new and improved physical data centers is just about right.
This leads to our look at the newest of these cloud storage technologies that is starting to cement itself in the industry, and we’re talking about hyperscale cloud data centers. It’s naturally a topic of interest for us here at 4GoodHosting in the same way it would be for any good Canadian web hosting provider, and we likely said the same with the entry from last year when we discussed colocation data centers.
Shifting Landscape
As of now hyperscale cloud data centers now make up a little less than 40% of all data centers around the world. An estimated 900+ of these facilities globally reinforces the major impact cloud computing continues to have on enterprise infrastructure investment. Of this number of hyperscale cloud data centres, about half are owned and operated by data center operators, and colocation sites are where the remainder of them will be located.
And as non-hyperscale colocation capacity makes up another 23% of capacity, that leaves on-premise data centres with just 40% of the total. Now if you skip back half-a-decade ago or so, the share for on-premise data centers was quite a bit larger, working out to nearly 60% of total capacity. But now the big surge in enterprise spending on data centers suggests a majorly shifting landscape.
The fact that companies were investing over $80 billion annually in their data centers, whereas spending on cloud infrastructure services was around $10 billion supports that. And when you consider that cloud services expenditure surged to $227 billion by the end of 2022 while data center spending has grown modestly at an average rate of 2% per year, it’s even in more in line with the attestation that hyperscale cloud data centers are increasingly where the industry is gravitating towards.
Onwards and Upwards
Over the next five years it is predicted that hyperscale operators will make up more than 50% of all capacity, with on-premise data centers declining to under 30% over that same time frame . But let’s be clear - on-premise data centers are not going to completely disappear. Rather, they will maintain a fairly steady capacity and still be extensively utilized despite the overall decline. A similar expectation is that colocations share of total capacity will remain stable for the most part too during this period.
And so it is now that amidst all of the excitement over the growth of hyperscale operators and the big push towards enterprises outsourcing datacenter facilities, on-premise datacenters will still be utilized and there will still be sufficient demand for them to the extent that investment will still be made. The total capacity of on-premise datacenters will remain reasonably steady over the next five years, declining but barely – going down by an average of just a fraction of 1% each year.
More notably for all of us in the hosting business will be continuing to see the rise of hyperscale data centers being driven by the increasing popularity of consumer-oriented digital services. Front and center among those are social networking, e-commerce, and online gaming, and they are just some of the many leading to a transformative shift in enterprise IT investments.
