September 25-26, 2024 The Wynn Las Vegas, NV More information

Q4 2021: Infrastructure Quarterly Report (Sector Overview)

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Executive Summary

It probably should not be surprising that in the last quarter of the year, nearly two years into the pandemic, there would be some bumps in the road. Moving into the second half of the year, there were signs of improving conditions and even growth acceleration for bellwethers like AWS and Digital Ocean. But the Omicron wave put a bit of a wrench in things and various macroeconomic headwinds arose while supply chain issues continue to plague businesses.

It is important to maintain context and perspective when it comes to Internet infrastructure. While the macroeconomic challenges are real, and global in scope, the overall trajectory has not changed. In fact, AWS has shown that its growth is pushing forward independent of outside conditions. Over the last several quarters, AWS has seen its growth actually accelerate, propelled by the upside inherent to the model and the faster pace at which organizations are using cloud to transform their business and find operating efficiencies. AWS, not surprisingly, stands out, but that is not to say others have dropped off. Google, Microsoft, and the many subscale providers like Digital Ocean and OVH are also demonstrating resilience.

Against this backdrop, it is worth reiterating that the tailwinds favoring the sector remain in place. The enterprise sector is accelerating adoption and moving up timelines for sunsetting and retiring legacy infrastructure. Meanwhile, SMBs and mid-sized organizations continue to flock to cloud computing and move beyond just basic usage. All this is creating a wave of demand that is pushing the limits of existing infrastructure. Data centre builds and expansions continue unabated, while carrier hotels are being upgraded and decentralized, and the move out to edge locations accelerates.

This report takes a close look at the noteworthy trends and developments from the recent 4Q21 period. A more detailed look at the M&A landscape, APAC region, hyperscale and subscale cloud sectors is available to clients in separate quarterly reports.