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  • Chris Bratton - Tech Journalist

Cloud expansion drives became a part of price hike: Datacenter customers may face challenges

The ongoing conflict between Russia & Ukraine and inflation are increasing prices for data centre buildings costs. Currently, unit costs are at an all-time high, and fixed-budget projects are taking a toll. Data centres becoming a piece for the price hike is worrying as we don't know when things will be normalised. Major hyperscalers and cloud providers are now paying 25 per cent more on data centre infrastructure for the same units.

According to a press release by Delloro, data centre Capex grew at the fastest rate in three years in 1Q 2022. Dell' Oro Group was behind the research where they discussed new "cloud deployments and higher data centre infrastructure cost" margin. Let's come to the same page; data centres are continually expanding. And as current world tech infrastructure, security lies a significant margin on these infrastructures, they need constant upgrade and modification. On top of that, we are learning about new data centres and the whole infrastructure built every month by large tech firms. With the supply chain issue finally coming to the point where prices are going back to normal for data centre chips and semiconductors, these storage and expansion drive price hike is again becoming a part of the problem.

In the 2022 Q1, the data centre infrastructure forecast grew to $18 billion with record investment. The first three months of 2022 are phenomenal spectating growth as the first year after coronavirus took its toll. During the pandemic, we saw a huge gain, particularly in businesses shifting towards the cloud. New building blocks were going through a slow pace of growth, but they did not stop. As we are aware of the current situation, inflation broke all-time expected results for the time being.

On top of all that, data centre providers are expected to widen the service region later this year. As many as 30 new regions will come under new data centre infrastructure in their native ground, meaning these expansions will take a massive amount of equipment. Even though the price is quite high, the providers have the funds to tackle the issue as it will go out of the customer's pocket later, which tells us how costly it may get.

We know that the cloud and hyperscalers are in no shortage of funds, and the development will continue. And we also know that the price will go out from the customer's balance as their subscription price may rise.

The hyperscalers charge customers following their products and the margin product used. We have to compute, storage, database, migration & transfer, networking & content delivery, developer tools, media services, security, analytics, mobile services, AI & ML, customer engagement, business applications, end-user computing, IoT, game development, blockchain, robotics and a wide array of services. These cloud providers take in billions of dollars in revenue, whereas they invest a great amount for future product & service development. Cloud expansion drives are used in almost all these services, and the data centre spending is sure to come to a point where users will be notified about the price change. It may be a slight drawback for large enterprise clients, but for startups and SMBs, it could be a decent cut in investment.

Also, we are moving towards a Metaverse, directed technological era, where storage is a phenomenal concern. Everything is on the cloud there, and there is no need for download to user devices. All are stream-based. With all that, we expect the whole of 2022 will cut a dent in this cloud and hyperscalers pocket; however, in 2023, the supply chain may stabilise, and we may be the bearer of good news for you. Stay tuned for more exciting news right on your homepage. Feel free to bookmark us or contact us for any service-related queries.


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