New data from Synergy Research Group -- who earlier this year tabulated the number of large data centers operated by hyperscalers as having passed the milestone mark of 1,000 -- now shows these facilities accounting for 41% of worldwide capacity of all data centers.
According to the analyst, just over half of that hyperscale capacity now resides in "own-built, owned data centers," with the balance existing in leased facilities.
Over its reporting period, Synergy foresees the total capacity of all data centers continuing to rise rapidly, driven primarily by hyperscale capacity growing almost threefold over the next six years.
Looking ahead to 2029, the firm forecasts hyperscale operators will account for over 60% of all data center capacity, with on-premise facilities' share of capacity dropping to just 20%.
"The mix of data center capacity is quite different region by region, an example being that hyperscale-owned data center capacity is much more prevalent in the US than in either Europe or the APAC region," noted John Dinsdale, lead analyst at Synergy Research Group. "However, overall the trends are all heading in the same direction."
Dinsdale continued, "And it is easy to see what is behind these trends. In 2012 enterprises spent twelve times as much on their data center hardware and software as they did on cloud infrastructure services, while today they spend three times more on cloud services then they do on their own data center infrastructure."
He added, "Add to that the huge growth in SaaS and consumer-oriented digital services such as social networking, e-commerce and online gaming, and the result is the burgeoning growth in hyperscale data centers."
On-Premise Data Centers Shrink Rapidly
Synergy Research Group emphasizes that while colocation's share of total worldwide data center capacity may continue to slowly decrease, colocation capacity itself will continue to rise steadily.
Meanwhile, though the actual capacity of on-premise data centers will remain relatively stable, on-premise share of total worldwide capacity is forecast to drop by almost three percentage points per year.
Synergy sees non-hyperscale colocation data centers accounting for 22% of worldwide capacity, with on-premise data centers rounding out 37% of the total.
That's in stark contrast to six years ago, when almost 60% of data center capacity was in on-premise facilities, as reckoned by the analyst.
Synergy's Dinsdale noted, "Enterprises are also choosing to house an ever-growing proportion of their data center gear in colocation facilities, further reducing the need for on-premise data center capacity."
Dinsdale concluded, "The rise of generative AI technology and services will only exacerbate those trends over the next few years, as hyperscale operators are better positioned to run AI operations than most enterprises."
Synergy says its data is based on a combination of several detailed quarterly tracking research services, which enables it to build a comprehensive analysis of data center capacity, with breakouts by region, country and metro markets.
The firm say its hyperscale research is based on an analysis of the data center footprint and operations of the world's major cloud and internet service firms, including the largest operators in SaaS, IaaS, PaaS, search, social networking, e-commerce and gaming.
The colocation research is based on Synergy's in-depth tracking of the colocation market, including quarterly data on over 290 individual companies. The enterprise on-premise analysis is based on Synergy's tracking of the data center hardware market.
Trillion Dollar AI Infrastructure Spending Forecast
A recently published report from Dell’Oro Group forecasts AI infrastructure spending to surmount a trillion dollars over the next five years, on the basis of worldwide data center capex growing at a 24% compound annual growth rate (CAGR) through 2028.
"We revised our data center capex forecast upward to a 24% CAGR by 2028 as a result of surging demand in AI-related data center infrastructure,” said Baron Fung, Senior Research Director at Dell’Oro Group.
Fung added, “AI has the potential to generate more than a trillion dollars in AI-related infrastructure spending in cloud and enterprise data centers over the next five years,” said Baron Fung, Senior Research Director at Dell’Oro Group.
Dell'Oro's research is predicated on the reality that AI infrastructure -- which includes servers with GPU or custom accelerators, along with dedicated networking, storage, and facilities -- is highly capital-intensive.
Dell'Oro's Data Center IT Capex 5-Year Forecast Report of July 2024 states that the top 4 US-based cloud service providers -- Amazon, Google, Meta, and Microsoft -- will account for half of global data center capex as early as 2026.
The report, which encompasses server capex and server unit shipment forecasts for Top 4 US Cloud, Top 4 China Cloud, Top 3 Tier 2 Cloud, Rest-of-Cloud, Telco, and Enterprise customer segments, also projects worldwide server revenue to reach nearly $0.5 trillion by 2028, with accelerated servers likely to account for more than half of that figure.
"While the industry continues to assess the potential return on AI-related investments, major efforts have been underway in the ecosystem in achieving long-term sustainable capex growth,” noted Fung.
Like Salt & Pepper, AI & Liquid Cooling Travel Together
The foreseen jump in AI infrastructure spending is totally in keeping with Dell'Oro Group's research from earlier this summer proclaiming the data center liquid cooling market has hit an inflection point, with mainstream adoption of liquid cooling being observed as starting in the second half of 2024.
The analyst forecasts this getting-less-nascent-by-the-moment trend to further materialize over the next five years (2024-2028) in a market opportunity amounting to more than $15 billion.
“After tracking the data center liquid cooling market for five years, it’s finally transitioning from a niche technology deployed in specific segments of the market to mainstream applicability,” observed Lucas Beran, Research Director at Dell’Oro Group.
Beran explained, “Historically, liquid cooling vendors touted increased efficiency and sustainability as factors behind the technology’s adoption. While those benefits remain true, it’s proved to be the increased thermal management performance capabilities, meeting the particularly demanding thermal requirements of high-end processors and accelerated servers, that is the current driving force behind its adoption."
Dell'Oro's Data Center Liquid Cooling Advanced Research Report found that CoolIT Systems, Boyd, and Motivair were the top three vendors in data center liquid cooling revenues in 2023.
The report deemed single-phase direct-to-chip liquid cooling (DLC) as the leading data center liquid cooling technology.
“As this [technology] adoption occurs, it’s single-phase direct-to-chip liquid cooling (DLC) deployments that are scaling first," confirmed Beran.
He continued, "This is the result of long-standing adoption in the high-performance computing (HPC) industry that has helped establish a more mature vendor ecosystem and end-user know-how to deploy and service the technology. Additionally, NVIDIA has specified single-phase DLC as the cooling technology to support its upcoming GB200 compute nodes."
This trend is expected to continue throughout the forecast period; however, two-phase DLC and single-phase immersion revenues are also forecast to materially grow during the timeframe.
Meanwhile, the report found that: while the enterprise customer segment, including HPC, led the data center liquid cooling market in 2023; going forward, the service provider customer segment (including the researcher's Top 10 Cloud, Rest-of-Cloud, Colocation, and Telco designations) is forecast to significantly outpace the growth of enterprises in terms of liquid cooling adoption.
