Market researchers from Dell’Oro Group calculate that organizations will invest up to €17.1 billion in data center infrastructure this year, up 25 percent from 2021.

The report shows that organizations spent more on data center infrastructure in the first quarter of 2022. Dell’Oro Group expects spending to remain high for the rest of the year. The researchers believe that investments will increase by 25 percent over the next three quarters, totalling $18 billion dollars (€17.1 billion) by the end of the year.

The increase is due to the high demand for cloud services. Hyperscalers like Google, AWS and Microsoft are forced to deploy new cloud environments and charge higher prices for infrastructure components. Dell’Oro expects hyperscalers and cloud providers to add up to 30 new cloud regions in the remaining year. The researchers also expect price increases with the arrival of new Intel and AMD processor series.

Scarcity in the supply chain

The growing demand for data center services is the result of shortages that followed the pandemic, including processors. While some analysts expected shortages to lessen by the end of the pandemic, challenges persist for now. This leads to higher costs for providers, which are typically passed on to end customers.

Furthermore, Dell’Oro observes that the trend results from an increasing amount of specialized data center services like AI and ML. Companies are becoming increasingly familiar with advanced technologies, leading to an increasing demand for on-premises hardware. Dell’Oro concluded that the market for data center equipment will fluctuate considerably until at least 2024.

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