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Cloud Data Center Recovers, Wireless LAN Slumps in Q3

Cloud data center

Cloud data center capex rebounded, thanks to higher spending on new data center facilities construction, while the wireless LAN market slumped during the third quarter, with global revenue declining 2% from the year ago period.

That’s according to new reports by Dell’Oro Group. The cloud data center report details the capital spending of each of the 10 largest cloud service providers, while the wireless LAN report is based on manufacturers’ revenue, units shipped and average selling prices.

Dell'Oro Group's Baron Fung

Dell’Oro Group’s Baron Fung

“Cloud data center capex for the top 10 cloud service providers returned to growth after two straight quarters of year-over-year declines,” said Baron Fung, director at Dell’Oro. “We project that spending on servers will increase in 2020, as the major cloud service providers revert to server capacity expansion and fill new data centers scheduled to launch next year,.”

The top 10 cloud service providers spent nearly $18 billion, in aggregate, on data centers, a 14% year-over-year increase, according to Dell’Oro. Amazon and IBM were the only two cloud service providers among the top 10 that grew their server capex to expand server capacity.

The top 10 are expected to launch data centers in nearly 40 new regions in 2020.

As for the wireless LAN market, softening demand occurred across all geographies, and such a broad-based decline has not occurred since the 2009 recession.

Dell'Oro Group's Tam Dell'Oro

Dell’Oro Group’s Tam Dell’Oro

“Wireless LAN is a hot market and everyone needs faster wireless connectivity in more places,” said Tam Dell’Oro, founder, CEO and wireless LAN analyst at Dell’Oro. “But the recent quarterly results show that geopolitical and macroeconomic uncertainties are dampening corporate spending for the near-term. Although we have reduced our outlook for 2020, the wireless LAN market is poised to undergo a significant transition to Wi-Fi 6 that we expect to drive market growth for the year.”

Cisco jumped ahead of HPE Aruba in Wi-Fi 6 sales to take an early lead in this emerging market segment. Extreme Networks is aggressively shifting their wireless LAN portfolio to WiFi 6 in order to position themselves for the upcoming market inflection point, according to Dell’Oro.

NBASE-T ports rose sharply quarter over quarter, a trend Dell’Oro expects to continue and to stimulate campus Ethernet sales.


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