Soft Enterprise IT Spending to Persist

“The major U.S. Cloud service providers have entered a digestion cycle and have slowed the purchases of servers and other data center equipment. However, we predict this digestion cycle to be short-lived, and capex growth will return to double-digit growth as soon as 1Q 2021,” said Baron Fung, Research Director at Dell’Oro Group. “Some of these Cloud service providers are overdue to replace or expand their server fleet, and many have aggressive plans to expand their global footprint of data centers which would spur a wave of spending,” explained Fung.

Additional highlights from the 3Q 2020 Data Center Capex Quarterly Report:

Data Center capex for the Top 10 Cloud service providers grew 4 percent in 3Q 2020.
Worldwide server revenue grew 5 percent Y/Y, driven by 1.2 million units of white box servers to the Cloud.
Enterprise data center capex declined 1 percent Y/Y.