Tuesday, October 17, 2017

Hyperscalers taking over the world at an unprecedented scale

Need of heavy capital expenditures means very few are part of the hyperscale group which is posed to continue to take over cloud and other verticals.

Hyperscale operators are becoming the world’s top leaders in a series of verticals from cloud to networks, researchers have found.

Synergy Research Group has released new figures that show a growth in cloud shares amongst hyperscalers which accounted at the end of 2016 for 68% of the cloud infrastructure services market (IaaS, PaaS, private hosted cloud services) and 59% of the SaaS market.

In 2012 those hyperscale operators accounted for just 47% of each of those markets.

According to the think tank, there are today 24 companies that meet the definition of hyperscale operating 320 large data centres worldwide, with this figure expected to increase by 100 new buildings by the end of 2018.

Synergy explains that hyperscale operators usually operate data centre networks with thousands of servers. However, players like Amazon and Google stretch this to the millions of servers across the global data centre fleets.

Today, the cloud leaders in this segment include Microsoft, Amazon and IBM each operating 45 or more data centres with at least two in each of the four regions (North America, APAC, EMEA and Latin America).

Synergy highlights that in order to become a leading hyperscaler, a heavy investment has to be done towards infrastructure with capital expenditures exceeding the vast majority of companies worldwide and therefore holding many back from leapfrogging into the hyperscale segment.

For example, Microsoft’s CEO Satya Nadella has unveiled that the company has since the launch of its Azure cloud invested nearly $20bn to build the necessary ecosystem.

This, according to analysts, means that hyperscalers will continue to both increase their share of service markets and account for an ever-larger portion of spend on data centre infrastructure equipment – servers, storage, networking, network security and associated software.

John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group, said: “[Hyperscale operators] are reshaping the services market, radically changing IT spending patterns within enterprises, and causing major disruptions among infrastructure technology vendors.”

Furthermore, it is not just in the cloud space that hyperscalers are disrupting the business landscape.

The players in this segment are also building the world’s networks, especially subsea cables, which a large portion of the global internet traffic now running through private networks owned or operated by hyperscalers, according to Tim Stronge, VP of TeleGeography.

With a dominant position in the cloud and networks, hyperscalers are also consequently becoming leaders in the services space.