Spending on cloud infrastructure services has grown by 35% to US$ 41.8 billion in the first quarter of 2021. According to tech analyst Canalys, customer spending exceeded US$40 billion a quarter for the first time in Q1, with total expenditure nearly US$11 billion higher than in Q1 2020 and nearly US$2 billion more than in Q4 2020.
The rapid acceleration of digital transformation over the past year given the pandemic has organisations adapting to new work practices, customer engagement, and business process and supply chain dynamics.
With the rise of digital transformation then comes an increased demand for cloud services to support data analytics and machine learning, data centre consolidation, application migration, cloud native development, and service delivery.
Moreover, with help from government stimuli, some economies are picking up. Given the roll-out of mass COVID-19 vaccination programs and subsequent easing of restrictions, there is an increased customer confidence to commit to multi-year contracts for cloud services.
The edge, including 5G, is a key area for investments, especially for the development of ultra-low latency applications and use cases, such as autonomous vehicles, industrial robotics and augmented or virtual reality.
“Cloud emerged as a winner across all sectors over the last year, basically since the start of the COVID-19 pandemic and the implementation of lockdowns. Organisations depended on digital services and being online to maintain operations and adapt to the unfolding situation,” said Canalys Research Analyst Blake Murray.
“Though 2020 saw large-scale cloud infrastructure spending, most enterprise workloads have not yet transitioned to the cloud. Migration and cloud spend will continue as customer confidence rises during 2021. Large projects that were postponed last year will resurface, while new use cases will expand the addressable market.”