The Evolving Data Center

The growth of public clouds will open many new opportunities for the semiconductor industry.

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Confession time. In addition to being utterly fascinated by all things chip design, I have always been absolutely enthralled by the magnificent data center. With a family member that has worked in them for most of his career, I can recalled being delighted to be amongst the racks in a second floor data center in Palo Alto in the early 90s. Time to time throughout my career it’s been thrilling to see other data centers throughout Silicon Valley, imagining what is possible with all that processing capability.

IBM SoftLayer Servers
Source: IBM

IBM data center Source: IBM

Of course, the growth in the public cloud is driving the business side of the data center, for the vendors supplying the equipment. According to market research firm IDC, vendor revenue from sales of infrastructure products (server, storage, and Ethernet switch) for cloud IT, including public and private cloud, grew 25.8% year over year in the second quarter of 2017 (2Q17), reaching $12.3 billion.

When it comes to the infrastructure for the public cloud, IDC recently reported that revenue grew 34.1% year over year and now represents 33.5% of total worldwide IT infrastructure spending at $8.7 billion, up from a 27.0% share one year ago.

Private cloud was nothing to shake a stick at either where IDC said revenue reached $3.7 billion for an annual increase of 9.9%.

Further, total worldwide cloud IT infrastructure revenue has almost tripled in the last four years, while the traditional (non-cloud) IT infrastructure revenue continues to decline and is down 3.8% from a year ago, although it still represents 52.4% of the worldwide share of overall IT revenue at $13.6 billion for the quarter.

Kuba Stolarski, research director for Computing Platforms at IDC said in a news release that the strength in public cloud growth continued at an accelerated pace through the first half of 2017, and most of this growth is being driven by Amazon. “However, it is important to remember that many of the other hyperscalers – Google, Facebook, Microsoft, Apple, Alibaba, Tencent, and Baidu – are preparing for their own expansions and Skylake/Purley refreshes of their infrastructure. At the same time, IDC is still seeing steady growth in the lower tiers of public cloud, and continued growth in private cloud on a worldwide scale. In combination, these infrastructure growth segments should more than offset the declines in traditional deployments for the remainder of 2017 and well into next year.”

This growth is good for chip and system designers for the sheer amount of opportunities. And just looking at what’s happening on the advanced memory front, it’s a very interesting time to be involved in this market.

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