Last year saw record worldwide spending on data center hardware and software – and the boom is set to continue.
Spending grew by a third, according to analysis from Synergy Research Group, but while there was growth across the board, the rise was mostly down to a 48% jump in spending on public cloud infrastructure, which now accounts for 55% of the total market.
Meanwhile, after five years of comparatively small growth, sales to enterprise clients burst into life in 2024, increasing by 21%.
According to Synergy Research Group, the growth in public cloud services has been driving increased investment in cloud infrastructure and hampering spending in on-prem infrastructure for the past 15 years.
But while this trend continued in 2024, the real driver behind increased spending was generative AI. Both cloud providers and enterprises have been rushing to buy GPUs to support their generative AI workloads – particularly from Nvidia.
Other big winners were Inspur, Super Micro, and the continued dominance of original device manufacturers (ODMs) selling to hyperscalers.
“GPUs and generative AI systems lit a fire under the market in 2024, resulting in record growth rates for the industry,” said John Dinsdale, a chief analyst at Synergy Research Group.
“While the ongoing success of public cloud has been the main driving force behind data center investments for well over a decade now, no-one imagined a 2024 market for data center gear reaching over $280 billion.”
Notably, Dinsdale said this upward trend is set to continue.
“It is good to see the enterprise side of the market growing again, though the long-term trend remains,” he added. “Ten years ago sales to public cloud providers accounted for just 20% of the market. That rose to 55% in 2024, and our forecast shows it reaching almost 65% five years from now.”
Total data center infrastructure equipment revenues, including both cloud and non-cloud hardware and software, look to have hit $282 billion in 2024, Synergy revealed, with public cloud infrastructure now accounting for $156 billion of the total.
The main hardware-oriented segments of servers, storage, and networking in aggregate accounted for 85% of the data center infrastructure market, with OS, virtualization software, cloud management, and network security accounting for the rest.
Leaving ODMs out of the picture, Dell is the overall leader in server and storage segment revenues, with Inspur the clear leader in server sales to public cloud providers.
Cisco heads the pack in the networking segment while Microsoft features prominently in the rankings due to its position in server OS and virtualization applications.
Nvidia, meanwhile, naturally holds a lead as a key supplier both to other system vendors and directly to service providers.
