Report: Third of Q3 Hardware Spending Was on Cloud Hardware

About a third of the money companies around the world spent on servers, disk storage systems, and Ethernet switches in the third quarter was for cloud infrastructure, according to a recent report by IDC.

Companies spent nearly half of that on public cloud infrastructure, while the other half was spent to stand up private cloud environments. Total cloud infrastructure revenue for the quarter was $6.5 billion, up 16 percent year over year.

Public cloud providers large and small have expanded their data center capacity substantially throughout this year which means many big cloud hardware purchases.

IBM, for example, in January committed $1.2 billion to global cloud data center capacity expansion, and has added new sites to its portfolio throughout the year. The company rolled out the most recent expansion just last week, announcing addition of 12 data centers to the footprint.

Software-as-a-Service giant Salesforce said it would add a data center in Paris in September, launched a U.K. data center in November, and announced an upcoming new site in Japan earlier this month.

Amazon Web Services launched a data center in Germany in October.

A lot of the private cloud build-out that occurred this year can be attributed to OpenStack, the open source cloud architecture and software that has grown tremendously popular. There is now a multitude of vendors offering enterprises their help in setting up private clouds.

They include big vendors, such as HP, which aims to be able to set up OpenStack on cloud hardware of the customer’s choice, be it new servers by any vendor or servers they already have, and startups like Piston Cloud Computing, which pushes the idea that next-generation clouds should be built on cheap commodity boxes.

These vendors also offer help with OpenStack cloud infrastructure setup to telcos, for many of whom OpenStack has become a way to quickly enter the public cloud services market as providers.

IDC defines public cloud services as services shared by unrelated users and designed for a market, as opposed to a specific organization. A private cloud service, according to the market research firm, is designed for a single enterprise and can be deployed at the user’s own data center or at another company’s facility. Private cloud services can be managed by a third party or by the user.

Richard Villars, vice president of data center and cloud research at IDC, said effective use of public and private services will give “first-mover advantage” to any company in a competitive market. “Whether internally owned or 'rented' from a service provider, cloud environments are strategic assets that organizations of all types must rely upon to quickly introduce new services of unprecedented scale, speed, and scope,” he said in a statement.