Hyperscalers Emerging From ‘Hype Phase’

By George Leopold

April 12, 2017

The number of companies fitting the description of “hyperscale” now accounts for 68 percent of the cloud infrastructure services market, a researcher found.

Synergy Research Group said this week is has identified 24 companies that meet its definition of hyperscale operators. Those companies offer infrastructure, platform and private hosted cloud services. An additional 59 percent offer software services. In 2012, the market research found that hyperscale operators accounted for only 47 percent of each of those markets.

The survey defined hyperscale operators as running hundreds of thousands of servers in their datacenters. The largest cloud services vendors such as Amazon Web Services, Google and Microsoft have millions of servers.

The market researcher reported that 45 percent of hyperscale datacenters are located in the U.S.; China is a distant second with 8 percent of high-end datacenters. “Country distribution of data centers reflects the U.S. dominance of cloud and internet technologies,” the survey noted.

The 24 companies identified as hyperscalers operate an estimated 320 datacenters. Market leaders AWS, Microsoft and IBM each have more than 45 datacenters with at least two of the four regions covered by the survey (North America, Asian Pacific, Europe, Middle East, Africa and Latin America).

Synergy Research, Reno, Nev., did not identify the 24 companies it designated as hyperscale operators, but did update its rankings of the leading public cloud vendors. The researcher said AWS maintained its dominant 40 percent share of public cloud revenues as of the fourth quarter of 2016.

Cloud rivals Microsoft Azure, Google Cloud Platform and IBM SoftLayer together accounted for about 24 percent of the public cloud market at the end of last year, up 5 percent over the previous year. That trend reflects the growing enterprise shift to a multi-cloud strategy designed to avoid overreliance on a single cloud provider.

Market share for other cloud providers declined slightly over the last year, the survey found.

Microsoft continues to lead the enterprise software services market along with a handful of hyperscale operators. Those emerging vendors lead in market segments such as database search, electronic commerce and mobile apps. Another key market for emerging hyperscalers is social media, where Facebook dominates and helps drive open-source infrastructure development.

As the number of hyperscale operators grows, the market researcher predicts that IT spending will continue to shift away from on-premise infrastructure to public cloud and software services as the shift to hybrid clouds accelerates. Hence, the cloud services market is “booming,” the market researcher said, with quarterly revenues soaring.

Over the next five years, Synergy Research projects that growth rates for infrastructure, platform and software services along with hosted private clouds will continue to grow “at impressive rates.” Hence, hyperscale providers will continue to increase their share of service markets, overall IT budgets and spending for datacenter infrastructure, it added.

The new hyperscalers are “radically changing IT spending patterns within enterprises, and causing major disruptions among infrastructure technology vendors,” noted John Dinsdale, research director at Synergy Research Group.

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