Philbert (“Phil”) Shih, Managing Director of Structure Research opened the infra/STRUCTURE Summit 2024 in Las Vegas with a presentation on the state of the managed infrastructure sector. Here are the top six takeaways from the data he shared at the event.
- Public Cloud Growth and Deceleration
While public cloud remains a dominant force in the infrastructure market, its growth has slightly decelerated. The public cloud sector is now expected to account for two-thirds of the market by 2029, down from earlier estimates of 75%. This slowdown reflects a shift in market dynamics, but public cloud remains a critical growth area, especially as enterprises continue to migrate workloads.
- Rise of GPU Cloud and AI Infrastructure
The introduction of GPU cloud as a new category in Shih’s managed infrastructure research underscores the growing importance of AI and high-performance computing (HPC). GPU cloud is projected to grow from 1% of the market today to 10–11% by 2029, driven by demand for AI model training and inferencing. This category will be vital for companies looking to support AI workloads, with companies like Cloudflare expanding their GPU infrastructure rapidly.
- Managed Infrastructure and Managed Public Cloud as Key Growth Drivers
Managed infrastructure continues to grow at a 14.1% CAGR over the next five years. A significant part of this growth is driven by managed public cloud, where service providers are layering value-added services on top of raw cloud infrastructure. Managed public cloud services are expected to grow at around 25.9% CAGR, reflecting increased adoption by enterprises that need managed services to optimize their cloud usage and overcome skill shortages.
- Transition from On-Premise to Off-Premise Infrastructure
The shift from on-premise to off-premise third-party infrastructure has been a long-term trend. On-premise infrastructure, which accounted for 90% of the market two decades ago, now comprises only 35%, and this figure will drop to just 10% by 2029. New infrastructure demand will increasingly come from net-new projects, rather than migrations from on-premise systems.
- Consolidation and Strategic Shifts
The infrastructure market is seeing continued consolidation, with large service providers acquiring smaller operators to expand their capabilities. At the same time, there is a strategic refocusing, as many companies shed legacy products and customers that no longer align with their growth strategies. This is leading to a more specialized and focused infrastructure market, where operators are concentrating on high-value services like managed public cloud and AI infrastructure.
- Sector Stability Post-COVID and Countercyclical Tendencies
The infrastructure sector remained resilient through the COVID-19 pandemic, with steady performance in key indicators like customer counts and operational efficiency. Shih emphasized that, while there was a temporary slowdown in revenue growth, the sector’s countercyclical tendencies—seen during both the 2008 financial crisis and the pandemic—helped it remain stable. This is especially evident in the recovery of sales pipelines and strong demand signals, such as increased CapEx investments by hyperscalers.
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