Hyper-Scale Data Center ‘Capex Kings’ Spend Record $120 Billion

Led by large-scale data center operators Amazon, Apple, Google, Facebook and Microsoft, 2018 broke the record for the most Capex spent on data centers in a single year with an astounding $120 billion.

“2018 set the record for the most hyper-scale Capex spending ever—and by a wide margin,” said John Dinsdale, managing director and chief analyst at Synergy Research Group, in an interview with CRN. “The hyper-scale operators are quickly becoming the Capex kings of the IT world.”

Last year, hyper-scale cloud and data center operators spent nearly $120 billion, representing a 43 percent spike compared with 2017, according to new data from Synergy. The majority of the $120 billion went toward building, expanding and equipping huge data centers with IT solutions. There are now a total of 439 hyper-scale data centers worldwide that are operational, with more than 100 new centers in the pipeline for 2019.

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Dinsdale told CRN that these industry titans are investing an increasing share of their revenue into Capex IT purchases. “These are capital-intensive markets, so they are building rapidly in order to support the burgeoning demand for services,” he said.

In terms of data center capex spending, hyper-scale operators are buying other vendors’ products—such as from Dell, Cisco Systems and Hewlett Packard Enterprise—as well as investing money into their own products.

“Some have developed their own hardware and have it built and supplied via ODMs [original design manufacturers]. Volume growth in ODM shipments has been one of the biggest shifts in the data center hardware market. But the hyper-scale operators still spend a lot of money with the traditional vendors,” said Dinsdale.

In the fourth quarter of 2018 alone, the largest hyper-scale operators—led by Amazon, Apple, Google, Facebook and Microsoft—spent $32 billion.

Synergy’s data is based on analysis of the Capex and data center footprint of 20 of the world’s major cloud and ISPs including the largest operators in Infrastructure as a Service, Software as a Service, Platform as a Service, social networking and e-commerce.