The global public cloud computing market’s growth trend continues to be easily predicted.
On a whole, it’s seen as an IT commodity, where customers have no loyalty to cloud service providers that follow a “race to the bottom” mindset – providing the lowest price at a given moment in time. Yet, everything about this type of business model seems somehow tentative.
According to the latest market study by Gartner, the cloud computing’s infrastructure as a service (IaaS) around the world increased from $18.2 billion in 2016 to $23.5 billion in 2017, which is 29.5% of the growth rate. Furthermore, Amazon was the leading vendor in the IaaS market in 2017, along with Microsoft, Alibaba, Google and IBM.
How is the IaaS market developing?
Sid Nag, the research director at Gartner, claimed that: “The top four providers have strong IaaS offerings and saw healthy growth as IaaS adoption is being fully embraced by mainstream organizations and as cloud availability expands into new regions and countries”. “Cloud-directed IT spending now constitutes more than 20% of the total IT budget for organizations using cloud computing. Many of these organizations are now using cloud computing to support production environments and business-critical operations.”
In the cloud computing’s IaaS market, the competitive landscape is strengthened around the current leaders. The top four providers are all hyperscale IaaS providers and account for roughly 73% of the total IaaS market and 47% of the combined IaaS and infrastructure utility service (IUS) market.
Amazon is clearly a leader in the global IaaS market with an approximately $12.2 billion revenue in 2017 – that’s up 25% from 2016. The company’s growth in 2017 was influenced not only by customers that are migrating from traditional data centers to cloud computing’s IaaS but also by customers that are implementing digital transformation projects, reflecting a wide range of use cases.
The Gartner assessment suggests that Microsoft has secured the number two spot in the IaaS market with growth of more than 98% of its IaaS offering, with the revenue of more than $3.1 billion in 2017. Microsoft brings its IaaS capabilities through its Microsoft Azure offering, which is a collection of infrastructure and platform services.
Who is in the third position? China’s Alibaba experienced a 63% growth in 2017, reflecting the company’s successful investment in research and development (R&D). Alibaba’s financial ability allows it to continue this trend and invest in global expansion, thus, give them the potential to become an alternative to the leading global hyperscale cloud computing providers in certain regions. Alibaba could disturb the current cloud incumbents.
The outlook for cloud service adoption and growth
“This reflects a fundamental change in what and how organizations are consuming technology. Some legacy infrastructure offerings, such as IUS, are seeing lower and slower uptake that impacts the combined IaaS and IUS market.” Mr. Nag claimed. “Additionally, a groundswell of demand for cloud-skilled personnel is forcing technology providers to change how they compete to meet this exploding demand.”
It is no surprise that the future of IT infrastructures will be driven by increased cloud computing adoption within on-premises data centers as well as in public cloud service platforms. A wide variety of hybrid cloud combinations and multi-cloud vendor deployments will become popular. Yet, what remains unclear is the viability of the cloud providers that are unable to maintain their ROI as the competitive battle always evolves over time.