Worldwide Hyperscale Market Model: 2018 Revenue and Future Outlook

September 26, 2019|Addison Snell, Christopher G. Willard Ph.D., Laura Segervall

EXECUTIVE SUMMARY

This Intersect360 Research report presents the 2018 total market model and future outlook for the overall Hyperscale market, segmented into market tiers.
Tiers are determined by total estimated annual IT spending on Hyperscale infrastructure: Tier 1, over $1 billion per year; Tier 2, $100 million to
$1 billion per year; Tier 3, $1 million to $100 million per year. Organizations spending under $1 million per year are not considered to be part of
the Hyperscale market in this methodology.

We give our historical assessment of the Hyperscale market for 2016, 2017, and 2018, by tier, with year-over-year growth rates. We also give our outlook
for the Hyperscale market in the coming years, as well as advice to vendors for addressing the different tiers. Because the Hyperscale market is comprised
of relatively few companies, particularly in the top tiers, we do not provide a specific five-year growth rate and forecast, but rather our qualitative
assessment of direction.

Although Hyperscale implies very large infrastructure, it is important to note that these web-based core processes exist across a broad
range of organization sizes, generating a corresponding range of requirements for information technology products and services. Organizations enter
the Hyperscale arena when an application scales beyond standard IT solutions and capabilities and leads to the adoption of specialized internet-facing
solutions.

Web search and categorization
Online retail and customer identification
Content hosting and distribution
Social media
Communication services
Cloud application services
Pattern recognition
Massively multiplayer online games (MMOGs)
Machine learning, artificial intelligence, cognitive computing

The total worldwide Hyperscale market amounted to $57 billion in IT spending in 2018. This represented 30% growth from 2017. Furthermore, the Hyperscale
market consolidated further into the top tier, organizations spending over $1 billion annually on IT for Hyperscale infrastructure. Beginning in 2019,
we believe the Hyperscale market has completed most of its initial expansion phase and is now predominantly driven by consolidation. Growth will continue,
but we expect it to moderate down from high growth seen in recent years. Even at these lower growth rates, it is reasonable to project that the Hyperscale
market could eclipse the $100 billion mark within five years.

TABLE OF CONTENTS

INTRODUCTION
What Is Hyperscale?
What Makes Hyperscale “Hyper”?
Hyperscale and Business Computing
Hyperscale and HPC
How Hyperscale is Unique
Hyperscale Vertical Markets
Table 1. Hyperscale Vertical Markets
WORLDWIDE HYPERSCALE SPENDING IN 2018
Table 2: Total Hyperscale IT Spending ($B), 2016 to 2018, by Market Tier
Figure 1: Total Hyperscale IT Spending ($B), 2016 to 2018, by Market Tier
FUTURE OUTLOOK FOR HYPERSCALE
Forecast and Future Market Dynamics
Advice to Vendors
APPENDIX A: HYPERSCALE MARKET SIZING METHODOLOGY
APPENDIX B: MARKET DRIVERS AND DAMPERS
Market Drivers
Market Dampers
Barriers to Entry

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