Hyperscale capex reaches $22 billion

New Q4 data from Synergy Research Group shows that the capex of hyperscale operators totaled $22 billion in the quarter and reached almost $75 billion for the full year, representing 19% growth over 2016.

Thursday, 1st March 2018 Posted 8 years ago in Digital Business by Phil Alsop

Much of that hyperscale capex goes towards building and expanding huge data centers, which have now grown in number to 400. The top five spenders are Google, Microsoft, Amazon, Apple and Facebook, which in aggregate account for over 70% of Q4 hyperscale capex. Across all hyperscale operators, 2017 capex equated to just over 7% of total revenues, although the ratio varies greatly by company, from a low of 2% to a high of 17% depending on the nature of the business. The research is based on analysis of the capex and data center footprint of 24 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce.

On average during 2017, the top five of Google, Amazon, Microsoft, Apple and Facebook in aggregate spent well over $13 billion per quarter. It is also notable that 2017 capex growth was particularly strong at Amazon and Facebook. Outside of the top five, other major hyperscale spenders include Alibaba, IBM, Oracle, SAP and Tencent. Among these five, Alibaba capex more than doubled in 2017, while growth at both Oracle and SAP was also above average. Other notables outside of the top ten include Baidu, eBay, JD.com, NTT, PayPal, Salesforce, Yahoo Japan and Yahoo/Oath.

“Over the last four years we have seen many companies try and fail to compete with the leading cloud providers. The capex analysis emphasizes the biggest reason why those cloud providers are so difficult to challenge,” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group. “Can you afford to pump at least a billion dollars a quarter into your data center capex budget? If you can’t, then your ability to meaningfully compete with the market leaders is severely limited. Of course factors other than capex are at play, but the basic financial table stakes are enormous.”

Hyperscale capex reaches $22 billion

New Q4 data from Synergy Research Group shows that the capex of hyperscale operators totaled $22 billion in the quarter and reached almost $75 billion for the full year, representing 19% growth over 2016.

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