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Q1 2019: Infrastructure Quarterly Report

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Internet Infrastructure Sector Overview Q1 2019

Executive Summary

Change and transition continue to be the dominant themes across the sector. Legacy services are increasingly giving way to next-generation offerings and there is a real sense that the lines of separation are becoming clearer by the day

The change is reflected not only in the underlying numbers, but in strategic circles. Product portfolios are undergoing constant change, while acquisitions are often driven by the need to acquire and augment technology and capabilities or jump into new segments and geographies.

Much of the response from the infrastructure services space is motivated by a desire to either pivot away or partner directly with the hyperscale clouds. But the hyperscale clouds are also competing with the same mindset. The likes of AWS, Microsoft and Google are investing heavily to outdo each other in the primary battlegrounds of the future: features, technology and innovation.

The shift to managed third party cloud is certainly not the only path forward. In many cases, it complements existing service lines that may not be performing like in years past, but will not be going away any time soon. Providers are also finding success pivoting into areas where hyperscale is less active or equipped to expand in. Managed applications are one area that service providers are having success in and the edge computing opportunity is just starting to scratch the surface.

Over time, there is no doubt that hyperscale will have an answer in some way or another. But it is early enough in these segments that significant opportunity awaits providers that are looking forward and thinking the game.