Cloud IT infrastructure revenue dropped 10.2% Y/Y in Q2 to $14.1bn, according to new IDC data. The decline was due to an overall slowdown in the industry, although private cloud sales continue to be the most stable sector.
IDC also lowered its forecast for total spending on cloud IT infrastructure in 2019 to $63.6bn, down 4.9% from last quarter's forecast and changing from expected growth to a year-over-year decline of 2.1%.
IDC lowers its forecast for total cloud IT infrastructure spending for 2019 to $63.6bn, down 5% from last quarter's forecast and changing from the expected growth to a 2.1% Y/Y decline.
Dell led the cloud IT vendors in market share in Q2 with $2.5B in revenue and a nearly 17% share, but sales were down 8% Y/Y. HPE came second with $1.75B and a 12% share with sales up 0.1%. Cisco rounded out the top three with $1.1B (+8% Y/Y) and an 8% share.
After a strong performance in 2018, IDC expects the public cloud IT infrastructure segment to cool down in 2019 with spend dropping to $42.0bn, a 6.7% decrease from 2018. Although it will continue to account for most of the spending on cloud IT environments, its share will decrease from 69.4% in 2018 to 66.1% in 2019. In contrast, spending on private cloud IT infrastructure has showed more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments. In the second quarter of 2019, vendor revenues from private cloud environments increased 1.5% year over year reaching $4.6 billion. IDC expects spending in this segment to grow 8.4% year over year in 2019.
Overall, the IT infrastructure industry is at crossing point in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50% mark for the first time but fell below this important tipping point since then. In 2Q19, cloud IT environments accounted for 48.4% of vendor revenues. For the full year 2019, spending on cloud IT infrastructure will remain just below the 50% mark at 49.0%. Longer-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.
Spending on the three technology segments in cloud IT environments is forecast to deliver growth for Ethernet switches while compute platforms and storage platforms are expected to decline in 2019. Ethernet switches are expected to grow at 13.1%, while spending on storage platforms will decline at 6.8% and compute platforms will decline by 2.4%. Compute will remain the largest category of spending on cloud IT infrastructure at $33.8 billion.
