At the infra/STRUCTURE Summit 2024 in Las Vegas, Philbert (“Phil”) Shih, Managing Director of Structure Research, delivered a powerful opening presentation on the state of the managed infrastructure sector. Phil emphasized the significance of infrastructure in the digital economy and provided a data-driven overview of the current landscape, key trends, and future growth projections.

The Evolving Landscape of Managed Infrastructure

The summit featured multiple tracks of discussions on different aspects of the infrastructure ecosystem, with Shih’s presentation focusing on the broader managed infrastructure sector, which includes categories like public cloud, colocation, and managed services. This year, an 11th category was added to their research: GPU cloud, a fast-growing segment that has seen remarkable traction due to the increasing demand for AI and machine learning workloads. GPU cloud, which barely existed five years ago, is projected to reach 10–11% of the market by 2029, up from just 1% today.

Key Market Growth Data

During his presentation, Shih highlighted a number of important data points:

  • Managed Infrastructure CAGR: The managed infrastructure space is expected to grow at a 14.1% compound annual growth rate (CAGR) over the next five years, fueled by trends such as cloud adoption, colocation expansion, and edge computing.
  • Public Cloud Growth: Public cloud continues to dominate the infrastructure market, with Shih projecting a 25.9% CAGR for this sector. In 2024, the total market value for public cloud infrastructure is set at $99 billion, which is expected to nearly double by 2029. Despite previous forecasts predicting a higher percentage of the market share, Shih shared that the public cloud will account for two-thirds of the market by 2029—slightly down from earlier estimates but still significant.

The Shift from On-Premise to Off-Premise Infrastructure

One of the central themes of Shih’s presentation was the long-term transition from on-premise infrastructure to off-premise, third-party managed infrastructure. He noted that, while on-premise infrastructure used to represent around 90% of the total infrastructure market, it now comprises only about 35%. By the end of the decade, this figure is expected to shrink to just 10%, signaling the near-total dominance of outsourced infrastructure models.

Trends Driving Future Growth

Several emerging trends and opportunities were identified as key drivers of growth in the sector:

  • Artificial Intelligence and GPU Cloud: Shih pointed out the growing importance of GPU cloud in supporting AI workloads, particularly in training models, high-performance computing (HPC), and inferencing. Companies like Cloudflare are rapidly expanding their GPU cloud capabilities, which Shih believes will be a critical area for future growth.
  • Managed Public Cloud: The rise of the managed public cloud model was also a focal point. Shih explained how service providers are increasingly focusing on offering managed services on top of public cloud infrastructure, with a clear trend toward value-add layers to increase margins and offer differentiated services.

Market Consolidation and Strategic Shifts

Shih addressed the ongoing consolidation in the managed infrastructure space, with large companies acquiring smaller service providers to expand capabilities. However, he also highlighted the emergence of boutique operators and specialized firms that focus on specific verticals, such as bare metal, edge computing, or specific application platforms. This shift reflects the growing complexity and specialization of the infrastructure market.

Moreover, Shih spoke about how many operators are reevaluating their product lines, de-emphasizing legacy services, and focusing on high-growth areas like managed public cloud. He pointed out that companies are increasingly prioritizing managed services over infrastructure resale, aligning with broader industry trends toward efficiency and specialization.

Stabilization After COVID-19

Reflecting on the impact of the COVID-19 pandemic, Shih mentioned that while the sector experienced a temporary deceleration in revenue growth and some macroeconomic challenges, it has remained resilient. He noted that key performance indicators (KPIs) for customer counts and operational efficiency have been steady, and sales pipelines have begun to stabilize. Shih emphasized that the industry’s countercyclical tendencies, which were seen during previous downturns such as the 2008 financial crisis, were once again in play.

Phil Shih’s presentation at infra/STRUCTURE Summit 2024 painted a picture of a robust, dynamic managed infrastructure sector that is set to experience significant growth in the coming years. Key growth drivers include the rise of GPU cloud, the managed public cloud model, and the continued migration away from on-premise infrastructure. As the market consolidates and becomes more specialized, operators are finding new ways to add value, drive margins, and stay competitive in an increasingly complex digital ecosystem.

Shih closed his presentation by highlighting the immense potential for future innovation, particularly in the areas of AI, edge computing, and specialized managed services, suggesting that the next decade will bring even more transformation to this already rapidly evolving sector.

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