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Hyperscalers: Massive Infrastructure Investments Stifle Competition
Data centers run by companies like Facebook, Google, Amazon (AWS), and Microsoft (Azure) dwarf anything being done by even large enterprises. The companies that manage these large data centers are being called the hyperscalers. Hyperscalers are able to quickly accommodate changes in demand for computing resources and offer high performance and high availability. They are firm believers in standards, automation and redundancy.
Enterprise business data centers can typically grow to support hundreds of servers and thousands of VMs, but hyperscalers are at least an order of magnitude bigger with thousands of servers running millions of VMs.
John Dinsdale, a chief analyst at Synergy Research, said that “Capex has reached levels that were previously unthinkable for these massive data center operators and it continues to climb. The largest of these operators are building economic moats that smaller competitors have no chance of replicating. In cloud computing especially, the ability to fund hyperscale capex levels has become a competition killer.”
Synergy estimates that the top five hyperscalers reached over $60 billion in CAPEX in 2018.
What does this mean for enterprise data centers? Dave Cappucio at Gartner predicts that by 2025, 80 percent of existing enterprise data centers will shut down. Digital transformation is driving these businesses to use the cloud and migrating away from traditional data centers.
