According to a Canalys report, global spending on cloud infrastructure services reached $73.5 billion in Q3 2023, with a 16% year-over-year increase. The top three cloud providers, AWS, Microsoft Azure, and Google Cloud, jointly grew by 20% and accounted for 65% of total spending. The market is stabilizing, and enterprise IT spending cuts on cloud services are slowly easing, partly due to the focus on AI. AWS maintained its dominance with a 31% market share, Microsoft Azure’s growth rate increased by 29%, and Google Cloud experienced a 24% growth rate.
According to Gartner, by 2028, 70% of tech workloads will run in a cloud computing environment, up from 25% today. The next wave of cloud computing will involve migrating more complicated workloads and introducing new options and requirements for cloud customers. Shifting critical applications to the cloud may include imposing cloud attributes on workloads in corporate data centers.
Server shipments are projected to fall by 20% in 2023 due to the increasing silicon content of systems driven by hyperheterogeneous computing. This shift towards fewer but more highly configured and costlier systems is fueled by the demands of AI, resulting in revenue growth. The trend of hyper heterogeneous computing is pushing up the silicon content of servers, with CPUs and co-processors expected to account for 30% of data center spending by 2027. Additionally, highly configured servers drive demand for data center power and cooling infrastructure, with liquid cooling expected to grow significantly.
Per reporting in CRN, the total aggregate value of MSP M&A deals peaked in Q3, and experts predict that interest rates will cool in 2024, leading to more deals in the IT services space. Despite high-interest rates, the number of transactions and the value of deals have increased. Managed service providers (MSPs) are defying the impact of high interest rates, and recurring revenue is critical in the MSP M&A space. The consensus is that interest rates will start declining next year, which is expected to drive significant M&A activity in the IT services sector.
Why do we care?
AI demands a lot of compute, and, notably, the two are so intertwined to drive more cloud adoption. No wonder the cloud providers lead in It – the demand – and are so invested in it – the revenue driver.
Suppose you also wondered what hyper heterogeneous computing is. It is a system that goes beyond using just multiple types of computing cores, like CPUs, GPUs, ASICs, FPGAs, and NPUs, as in heterogeneous computing. It involves using a wider variety of hardware clusters to solve a single problem. If nothing else, we care to learn, too.
