We live in the information age and since the advent of computers the shift toward computerization and digitalization has continued to accelerate. We are now at a point where digital transformation has become a necessity, a “to be, or not to be” question. Companies who are behind in implementing these changes will have a difficult time competing, hence they are investing heavily in digital transformation. The shift to digitization brings a massive processing demand and produces immense amounts of data; and this is where the hyperscalers come into picture.
Data center infrastructure company Vertiv defines hyperscale data centers as “massive business-critical facilities designed to efficiently support robust, scalable applications.” Data centers have been around for some time, but the hyperscale data center market is relatively new, as they are significantly larger than enterprise data centers, typically exceeding 5,000 servers and 10,000 square feet. Before 2016, it was rare that data center leases exceeded 10MW of capacity. According to Synergy Research Group, since 2015 the number of data centers big enough to be classified hyperscale has doubled to more than 600 at the beginning of 2021. Initially these facilities were owned and operated by tier one players such as Apple and Facebook for their own operations. With the rise in public cloud adoption hyperscale investments have exploded. Synergy Research Group reported that enterprise spending on cloud infrastructure services in Q1 of 2021 was $39 billion with the year-on-year growth rate 37%. The growth rate has been going up for the prior 3 quarters, unusual for such a large, high-growth market.
Amazon and Microsoft are the leading hyperscale cloud providers, dominating the market with combined market share of over 50% and still going strong. In the last quarter of 2021 Microsoft had reported $22.1 billion in revenues and 46% growth for Azure and other cloud services, which demonstrates the strong demand for their hyperscale services. Amazon Web Services (AWS) revenues were also up by 40% to $40 billion in the same period, but Microsoft has been narrowing the gap for the market share. Google also benefitted from the trend with $5.5 billion revenue in the fourth quarter of 2021, also up 44% year-over-year, maintaining its position as a distant third. The end is nowhere in sight. Analyst firm Dell’Oro predicts this trend to continue with data center spending to increase 61% by 2026. Dell’Oro forecast data center capex to hit $350 billion by 2026 compared to $218 billion in 2021.
What makes hyperscalers so strong and attractive for businesses is a collection of advantages. At the minimum they provide massive computing, storage and networking capabilities which their clients can scale as needed. The performance and scalability parallels between hyperscalers and the needs of today’s 5G centric Communication Service Providers (CSPs) are becoming more common. As such, we see many CSPs and Hyperscalers beginning to collaborate in the areas of Virtualized Core and Multi-Access Edge Computing (MEC) services. IoT applications in particular start with a small set of devices and can scale rapidly in number and geographic deployment. Management of large IoT deployments and hyperscaler data ingestion results in the collection of big data which in turn brings additional requirements such as analytics, AI and cyber security to name a few. But hyperscalers can provide additional services such as IoT connectivity, which will expedite the process from idea to production, helping companies gain an advantage over competitors. Global cloud providers have additional offers, such as localized connectivity, commercial and regulatory compliance, low-touch provisioning, interoperability, centralized management, and visibility. Hyperscalers do this with optimum effectiveness thanks to the amazing engineering behind these technologies.
After this quick look into the growth rates and value propositions of hyperscaler offerings, I trust that many readers will agree with my prediction, “Over the next few years it will become nearly impossible to find large scale IoT implementations that are not hyperscaler cloud based.” Harnessing the power of IoT sensory data in combination with powerful tools available in the hyperscaler cloud environment is a winning combination for application developers. Utilizing easy-to-use hyperscaler ready IoT ingestion services seamlessly accomplish the difficult tasks of IoT device and data management and provides native delivery of IoT data to the hyperscaler cloud services. With these services, Tartabit is putting the power of real time IoT data into the hands of every developer, which leads to innovative applications providing the power of real time awareness and IoT sensor context into the dashboards and digitized processes used by business leaders across every industry.
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