Digital Economy Weekly - February 9, 2025

Story of the Week

Don't Forget: Enterprise IT Still Matters

Within all the talk of magnificent companies, mega-investors, billions and billions of dollars and the march of new gigawatts around the world, we can remember that enterprise IT still matters.?

It's good to take a pause and remember there is consequentiality beyond the small number of people who've been in the AI-centric news over the past few weeks. Companies in the Fortune 500, Global 2000, and similar lists are joined by millions of smaller companies and individuals who buy digital infrastructure for their companies and actually drive a multi-trillion-dollar global business.

Long-running reports from Gartner are a prime source of overview data here. The 2025 Gartner Worldwide IT Spending Forecast shows slightly more than $5.7 trillion to be spent on IT this year, including $367 billion on data centers, $800 billion on devices, $1.2 trillion on software, $1.7 trillion on IT services, and $1.6 trillion on telco.?

The total comprises about 5 percent of the global economy. But that 5 percent truly drives the other 95 percent today. Even in the United States, which has the world's largest economy and by far the world's most powerful consumer economy (with more than $16 trillion in spending expected this year), it is the enterprise IT lying underneath it all that makes things possible.?

So an obvious question which must not be ignored about the latest trends is, what does this mean for enterprise IT? Even the poor IT gang at Dunder Mifflin needs to stay on top of things, understand what the latest trends mean for them, and be active in adopting the tech that's best for the company. An IDCA survey in 2024 reinforces this notion, with 66 percent of enterprise IT respondents citing AI as the main “game-changer” in their world today.?

A similar audience surveyed by a major industry event in 2018 found cloud computing cited by more than 60 percent of respondents as the “primary” technology in their sites. The contrasting results in 2018 and 2024 are not a surprise. In fact, it's been the growth of cloud computing – public, private, hybrid, and multi – that's driven enterprise IT to new capabilities and compute consumption levels, begetting an era in which powerful AI platforms are becoming real.?

Cloud computing has become part of the furniture over this time, now used by consumers to store pictures and documents, and considered a de facto way of doing computing. The Big Three now rack up about $300 billion annually from it.

But wait. The Gartner report cited above projects $2.9 trillion in enterprise software and services this year. Where is all this budget being spent? We cannot make a clear, apples-to-apples comparison between public-cloud revenues and overall enterprise IT spend, but it's clear the the majority of enterprise IT infrastructure and consumption is happening on-site or with a variety of vendors.?

The dilemma of buying cloud public-cloud services and losing control versus DYI virtualization and cloud and not doing it as well as public cloud providers remains. Colocating with major providers provides another attractive option, with less DYI risk – and with no major colo vendor having more than about 7 percent of this market, less fear of vendor domination.?

There are indeed as many ways to “do” enterprise IT as there are companies doing it. And the people managing these doings are highly consequential. Enterprise IT is the heart and soul of today's global economy, the world's nascent and growing Digital Economies, and how the world will house, clothe, feed, transport, and entertain itself today and tomorrow. It's good to remember this as we see someone smiling and talking about sending another $10 or $100 billion or a trillion dollars or so into the etherverse.

Links of the Week

Google, Microsoft Both Say Their Data Center Capacity is Constrained

Google executives blamed constraints on their data center capacity in acknowledging a miss on expected growth in cloud computing, and in particular growth driven by AI.?

The miss by Google slammed its stock price for today, as the company joined Microsoft in lamenting a physical shortage of capacity to meet AI-driven growth it could have accommodated. Read here.

Silicon Valley-based Dell'Oro Group Sees $1 Trillion Data Center Market by 2029

“We project that data center infrastructure spending could surpass $1 trillion annually within five years. While AI spending has yet to meet desired returns and efficiency improvements, long-term growth remains assured, driven by hyperscalers’ multi-year capex cycles and government initiatives such as the $500 billion Stargate Project,” said Baron Fung, Senior Research Director at Dell’Oro Group. Read here.

The UAE Joins with France on Gigawatt AI Data Center

The word out of Paris and President Macron is that the UAE will be joining forces with France to invest tens of billions of euros into a gigawatt-sized data center. France, which produces 65 percent of its electricity with nuclear power, does not face the energy-shortage problems experienced by much of the world, and can hypothetically charge ahead with this ambitious plan. The center has been referred to as an "artificial intelligence data center." This proposed project would be the largest such facility in Europe so far. Read here.

Cassava Funded by Google and Others for Digital Infrastructure Development in Africa London-based Cassava closed an equity investment round of $90 million with participation from Google for digital infrastructure development in Africa. Other investors include the US DFC and the Finnish Fund for Industrial Cooperation.? This new round coincides with a refinancing deal of more than $200 million for development in South Africa.?Read here.

Italian-Japanese Joint Venture Buys More than a Gigawatt of Renewable Energy in Australia

Potentia Energy is a joint venture between Italy's Enel Green Power and Japan's Inpex. Turning its collective eyes to a third country, Australia, the venture recently acquired a 1.2 GW renewable energy portfolio there, including more than 700 MW of operational wind and solar assets and 460 MW in late-stage development.?Read here.

DeepSeek Being Banned Here and There in the World

Deep ripples from last week's DeepSeek announcement continue through several ponds, with the latest developments involving bans of its use. The US government very quickly banned its use in certain departments and agencies, legislation was introduced in the US Congress to ban it overall, and at least one state governmer has inveigled against DeepSeek as well. Now government agencies in South Korea have banned its use, joining similar restrictions in Taiwan and Australia in the Asia-Pacific region. Read here.?

Big Commitments to AI Centers Confirmed, AI Stocks Start Rising Again

For those concerned about short-term dips, there was good news in AI-driven stocks this week, led by Nvidia, as several of the Magnificent Seven reaffirmed their commitments to aggressive data center growth in the near future. Meta, Microsoft, and Google confirmed their continued plans to invest $220 billion in AI centers, an amount that would by itself increase the entire US data center footprint about about 70 percent. Read here.

MIT Researchers Use Generative AI to Create 3D Genome Structures

AI can do things besides complicate simple searches and write poorly, as evidenced by a new study from researchers at MIT, who are working with a generative AI environment to model cell-specific gene expression patterns. It's a three-dimensional process to show genome structures.?Read here.

Oracle Cloud Cited as Leader in Recent IDC Report

Oracle Cloud still has a market share in the lower single-digits within the global cloud-computing market, but is gaining traction among analysts and surveys of the industry. It was recently named a leader by IDC, seemingly on the strength of its "join-'em" strategy, in which Oracle has established multicloud partnerships with Azure across 12 regions, Google Cloud across 11 regions, and AWS. There are no transfer fees in these arrangemens, and Oracle is also cited as providing options for Intel, AMD, and Arm processing. Read here.

Heard in the Industry

“With China pouring $1.4 trillion into AI, this isn’t just about technology—it’s a high-stakes battle for global AI supremacy.”? – IDCA AI Counsel Mark Minevich

Heard in the Aisle

“Water efficiency is part of our core design ethos. This is critical, not only in places where there are ongoing drought conditions, but also critical in others where we just want to be conscious of general impacts to the water and communities in which (our) campuses are situated.” – Keith Heyde, Stargate infrastructure team.?

Country Snapshot: Egypt

“Time fears the pyramids,” it is said, a comment reflecting the awe experienced by people gazing upon structures as old as 4,700 years or more. But even Egypt's ancient pyramids are young in a land in which remnants of the oldest surviving structures date to 100,000 years or more and evidence is found for toolmaking dating back as far as 2 million years ago.

Egypt is old. Its stifling, crowded, ancient capital city of Cairo (al-Qāhirah as transliterated in Egyptian Arabic), which lies astride the Nile River, has a “modern” era dating to Roman occupation times, and can feel old to its 20 million+ residents and 15 million or so annual visitors alike.?

Perhaps Egypt's age impedes progress. The country scores below the world average on the IDCA Digital Readiness Index, with weaknesses in digital infrastructure, internet access and speed, mobile connectivity, and especially servers and data centers. It does have a low amount of income disparity, but this is faint praise in a country that has seen per-person income grow very slowly over the past decade and which remains mired in the bottom quartile of income levels.?

Egypt is considered to be a Frontier Market in the IDCA index, the fourth of five income tiers, and a place in which many dynamic, up-and-coming countries also reside, including India, Bangladesh, Philippines, Morocco, Tunisia, and Ghana. Egypt's bond rating (B+ according to S&P) is non-investment grade but above average for Frontier Markets, and it retains interest in foreign investors intrigued by its large population of more than 100 million people, as well as its Suez Canal's essential role as a key global transportation hub.?

Cairo is still considered to be an intellectual hub in the Arabic and Islamic worlds, and as noted above, a popular destination. With a story that dates back dozens of millennia, we can therefore ask whether what happens here over the next 10 or 100 years will make an impact on the Egyptian consciousness. Or will time simply continue to cycle with the rhythms of the Nile?

Inside IDCA

DeepSeek and What It Really Means

IDCA Editor-in-Chief Roger Strukhoff interviewed AI Counsel Mark Minevich this week about the pros, cons, and real meaning of DeepSeek. How much did it really cost to develop? Did it launch a new era o AI? What does it mean to enterprise IT? And where is AI headed? Mark addressed all these questions and more, far more.

The live session is now posted and available for listening at any time.