The cloud computing market has been growing at an impressive rate in the last few years. As the industry is coming of age, can it maintain such a pace? Goldman Sachs is positive that the cloud computing market will continue to grow bigger.
The viewpoint is presented in the company’s recent quarterly report on the cloud computing market.
Accordingly, the researchers at Goldman Sachs think that the cloud computing services market will grow at least 20 percent annually by 2021. However, most of the increased spending will go to the Big 4 of cloud computing: Amazon, Microsoft, Google, and Alibaba.
Since Amazon launched its Amazon Web Services more than a decade ago, pioneering the cloud computing market, AWS has been growing constantly. The service provider is now a multibillion-dollar business, leading the market year after year. And the good news for Amazon is that Goldman Sachs believes that AWS will keep that number one position for quite a while.
The cloud computing market will be growing bigger
Analysts at Goldman Sachs predict that spending on cloud computing will increase as many companies who haven’t moved to the cloud yet will switch to cloud computing solutions in the next few years. The dominant choices will be either IaaS or PaaS. Enterprises are likely to spend more on IT and the increased portion of IT budget will be on cloud computing.
The world has seen a trend of businesses moving to the cloud in the last couple of years. Last year, enterprises spent $47 billion on the core cloud services. Goldman Sachs estimates that the number can reach $62 billion in 2018. By 2021, spending on cloud computing will grow to $116.
The top 4 will dominate the cloud computing market
The size, potential, and prospect of the cloud computing market should have left plenty of room for competitors to enter and grow. Nonetheless, Goldman Sachs thinks that the market is progress on a consolidating tendency. Experts predict that the Big Four cloud computing services providers will make it really difficult for other competitors to compete. AWS, Microsoft Azure, Google Cloud, and Alibaba Cloud have the resources to cover the whole market.[
Last year, these four companies made up for 56 percent of the core cloud computing market. By next year, they will cover up to 84 percent of it with the first three names accounting for 77% of the total cloud computing market. It means the revenue of the others will decrease no matter how bigger the market gets. Goldman Sachs estimates that next year, the rest of the market will make only $12 billion, decreasing from $21 billion of last year and $20 billion of this year.
If this projection is correct, giant tech companies like IBM and Oracle will be seeing their recent big investments in the cloud computing business returning little revenue. Things will be even harder for smaller providers if they can’t differentiate themselves from others.