There are four trends you need to know about data center spending, as seen in tech companies' earnings.
Enterprise data center funding can be patchy
Data center costs are set to fall significantly as cloud providers increasingly spend more on infrastructure . In particular, the cost of an enterprise data center is minimal. Cisco and NetApp are prime examples. Hardware is a tough sell, and data center costs are kept low by economic issues, unforeseen events, and major changes in public cloud providers.
Cisco CEO Chuck Robbinssaid the buying cycle is expanding due to factors such as macroeconomic concerns and the coronavirus that originated in China and is spreading at an alarming rate. As such, Cisco is working to bring a software and subscription business model to market and improve the levels of security it offers.
Additionally, Robbins said that 5G, Wi-Fi 6 and the move to the cloud means there will be a healthy networking. Cisco's major growth trends will start to address cloud and telecom. It is worth noting that enterprise product orders fell 7% in the second quarter of the fiscal year. In the second quarter of Cisco's fiscal year, the company's security business is growing, but from a smaller base. Scenarios of Cisco are becoming increasingly intense, after the company's earnings were made public.
NetApp CEO George Kuriansaid on NetApp's conference call that business trajectories are no longer predictable and predictable due to the challenges in the macro economy and the unpredictable behavior of large companies in the market. NetApp also had some issues in the last quarter.
Specifically, according to the CEO, the market environment has been unstable for a few quarters, the same applies to customer spending, business IT spending for on-premises data centers.
Equinix emphasizes the value of interconnections and the development of multiple hybrid-clouds
While enterprise data center spending can be volatile, Equinix reported a strong fourth quarter for 2019 as its platform and data centers specialize in secure connections between enterprises and public cloud. Equinix CEO Charles Meyers described how demand for private connections and infrastructure is growing.
The pace of digital transformation continues to accelerate, driving major changes across industries as enterprises embrace connectivity as a critical part of their infrastructure strategy and embrace hybrid and multi-cloud. Data is being created, moved, analyzed and stored at unprecedented levels. These dynamics are expanding Equinix’s target market as customers seek to distribute global infrastructure to meet increasingly demanding workloads and the need to locate and interconnect private infrastructure in close proximity to a rapidly growing cloud-based resource pool. Equinix’s revenue for 2019 was $5.56 billion, up 10% year-over-year.
AWS receives more revenue from its servers
One of the things that didn’t get much attention during Amazon’s fourth-quarter earnings call was how the company is “getting more life” out of its AWS servers. Specifically, AWS depreciates its servers over four years instead of three. AmazonBrian Olsavsky noted the server depreciation on an earnings call. He also noted that the company’s goal is to make its server capacity last longer. At the same time, it continues to refine its software to run more efficiently on hardware. Olsavsky also said that Amazon has been able to keep infrastructure costs relatively under control over the past two years.
CLOUD providers will build the data centers and then build the data center that will incur higher or lower costs
Technology vendors will increasingly sell their products to cloud providers. First on the list is Intel. Intel reported a better-than-expected fourth quarter, but noted that its revenue fell 7%. However, cloud revenue for Intel was up 48% from a year ago as cloud service providers grew. Intel CEO Robert Swan noted that the company's data group may see some shifts in demand from cloud providers.
