Building the cloud: Webscale network supply chain analyzer

The world’s largest technology companies are investing heavily in webscale networks. These are centered around enormous webscale, also known as “hyperscale” data centers, and the web of infrastructure connecting them.

This webscale network operator (WNO) sector of companies spent more than $100B in capex in a single year for the first time, investing $115.4B in 2018, up 48.4% YoY. Nearly half of WNO capex is for technology. Further, webscale operators spend even more on R&D each year than capex;  webscale R&D expenses in 2018 were10.3% of revenues, ahead of capex/revenues ratio of 8.5%. With this spending rise, it is important to understand how WNOs blend internal expertise with procured technology from outside vendors to build their networks.

MTN Consulting’s “Webscale Network Supply Chain Analyzer” tracks technology spending in this sector by digging deep into the webscale-related supply chains of each operator. The Analyzer tracks contracts/deals between WNOs and technology vendors across eight product categories, and provides detail on type of relationship and nature of deal. The goal is to provide a comprehensive view of the competitive landscape facing vendors who aim to sell or partner with webscale operators.

In total, this database includes 486 entries. They are concentrated in the 2016-18 period but stretch back to 2010. The vast majority of contracts involve one of the top 8 WNOs, who account for ~80% of total WNO capex. More companies are building webscale networks over time, though, and more vendors are selling to them. Our coverage will evolve with the sector.

File format: Excel