Hyperscale Data Centers Revolutionizing and Disrupting the IT Industry

Data centers are a key component in supporting the explosion of cloud infrastructure services, and spending on both service and infrastructure is growing at a break-neck pace. New findings from Synergy Research Group suggest hyperscale data center operators are spending billions of dollars to build out their architectures throughout the world in an effort to support the need for cloud services.

Synergy told Datamation that spending on cloud infrastructure services alone is growing at a rate of 50 percent per year, signaling a massive need for global data center expansion. The company found that the top four cloud providers maintain 110 data centers spread across 20 countries and expect to add 22 new facilities over the next year.

"Building and managing data centers is a hugely expensive and complex process that an increasing numbers of enterprises are trying to minimize or exit altogether," said John Dinsdale, chief analyst and research director at Synergy Research Group. "The investment numbers involved in creating a global footprint of data centers are now mind-boggling and this is leading to big changes in the nature and structure of the IT industry."

Indeed, AWS, Microsoft, IBM and Google are not only the top cloud infrastructure players, but are also the companies building out their hyperscale data center footprints. The rise of network functions virtualization (NFV) and software-defined networking (SDN) is also playing a role in how data centers are being architected and built out. Hyperscale cloud providers and data center operators are under increasing pressure to not only build out their footprints, but to do so as efficiently and cost effectively as possible. That is resulting in more spending on virtualization solutions, bare metal servers and network optimization and management technologies, a trend that is revolutionizing the entire data center industry.

Synergy found that spending on enterprise data center equipment has remained static, while original design manufacturers (ODMs) are gaining traction when it comes to supplying hyperscale data center operators with equipment. This has resulted in a noteworthy market shift away from legacy equipment providers and has caused telecom companies to rethink their data center strategies as well. Verizon and AT&T are among a slew of telecom operators announcing comprehensive SDN strategies just over the past year.

"This is a time of unprecedented change in the IT industry," said Dinsdale. "Companies like AWS and Microsoft are now major players in enterprise IT; IBM is totally reinventing itself; companies like Equinix and NTT are amassing huge data center footprints; while HP and Cisco are aggressively growing their cloud technology business units. We do not expect the rate of change to lessen over the coming years."

Edited by Maurice Nagle