Public Cloud Revenue Not Slowing, Led by AWS, Azure, Google Cloud, Salesforce

Public cloud revenue in the first quarter of the year soared 26% over the same period in 2021.

That’s according to new stats from Synergy Research Group.

Across the main service and infrastructure markets, public cloud revenue reached $126 billion, analysts said on Wednesday. The sectors with the most growth?: Infrastructure as a service and platform as a service. Combined, the first-quarter revenue for these cloud solutions grew by 36%, topping more than $44 billion.

Synergy Research Group’s John Dinsdale

“Public cloud-related markets are typically growing at rates ranging from 15%-40% per year, with PaaS and IaaS leading the charge,” said John Dinsdale, a chief analyst at Synergy Research Group. “Looking out over the next five years, the growth rates will inevitably tail off as these markets become ever-more massive, but we are still forecasting annual growth rates that are generally in the 10%-30% range.”

Indeed, the rate of public cloud revenue increases is causing industry observers to ask whether cloud spending is slowing or stabilizing. As with any technology, unprecedented adoption — as happened with cloud during COVID-19 — can raise investors’ hopes that they’ve latched onto a money-maker that will give them ever-higher returns.

But there are ceilings. Cloud providers may be hitting those as end users begin to better control their cloud spending. Organizations are not necessarily slowing adoption so much as better managing the resources they use so they stop overpaying. (And with inflation at record highs and a recession looming, who wants to shell out more than needed?) As more organizations lend attention to their cloud expenses, public cloud revenue will inevitably take a hit; yet, that does not mean reliance on the cloud is waning.

More Is Coming

To that point, Synergy Research says the major cloud providers will have to keep adding data centers and computing power to keep up with demand. Dinsdale projects that timeline to stretch over the next three to four years. And as the public cloud vendors require more access and power, that will only bode well overall, he noted.

“[T]he major cloud providers need an ever larger footprint of hyperscale data centers and more raw computing power, which then drives the markets for data center hardware and software,” Dinsdale said. “For sure the competition will be tough, but up and down the cloud ecosystem there will be a bright future for companies that bring the right products to market in a timely fashion.”

On that note, analysts said that public cloud providers spent $28 billion – 20% more than last year – to build, lease and equip data center infrastructure.

And lest we overlook the other contributors to cloud environments, take a look at some additional areas seeing increasing revenue. For example, Synergy says managed private cloud services, enterprise software as a service, and content delivery networks added a combined $54 billion in service revenue in the first quarter. Percentage-wise, the figure was not far from that of public cloud revenue — rising 21% from 2021.

In terms of regions, the United States remains the center of gravity, as Synergy put it. The United States accounted for 44% of all cloud service revenue in the first quarter. It also made up 51% of hyperscale data center capacity.

Across service and infrastructure markets, most players are U.S. companies. The rest are mostly Chinese firms, according to Synergy. China was responsible for 8% of all first-quarter cloud service revenue and 15% of hyperscale data center capacity, per Synergy.

Finally, the companies contributing to the rising public cloud revenue will come as no surprise. Synergy cited the most prominent vendors as Microsoft Azure, Amazon Web Services, Salesforce and Google Cloud. Other major players included Adobe, Alibaba, Cisco, Dell, Digital Realty, IBM, Inspur, Oracle, SAP and VMware. All told, these providers accounted for 60% of all public cloud revenue, or cloud-related revenue.