COVID-19 Provides Boost in Enterprise Spending on Cloud Infrastructure

Enterprise spending on cloud infrastructure services jumped during the third quarter, according to new data from Synergy Research Group.

Enterprises spent nearly $33 billion on cloud infrastructure services during the quarter. That’s up 33% from the same quarter last year.

Amazon and Microsoft continue to account for over half of the worldwide market. Amazon market share remained at its long-standing mark of around 33%. Microsoft’s share was over 18%.

Google, Alibaba and Tencent are all growing more rapidly than the overall market and are gaining market share. Together they account for 17% of the market.

Surprisingly Strong

Synergy Research’s John Dinsdale

“While we were fully expecting continued strong growth in the market, the scale of the growth in Q3 was a little surprising,” said John Dinsdale, a Synergy chief analyst. “Total revenues were up by $2.5 billion from the previous quarter, causing the year-on-year growth rate to nudge upwards, which is unusual for such a large market. It is quite clear that COVID-19 has provided an added boost to a market that was already developing rapidly.”

The other cloud providers in the top 10 ranking are IBM, Salesforce, Oracle, NTT and SAP. In aggregate, the top 10 providers account for 80% of the worldwide market, with the remaining 20% coming from a long tail of small cloud providers or large companies with only a small position in the market.

Synergy estimates quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $32.8 billion, with trailing 12-month revenues reaching $119 billion.

Public IaaS and PaaS services account for the bulk of the market and those grew by 35% in Q3. The dominance of the major cloud providers is even more pronounced in public cloud. The top five control almost 80% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world.

“The companies competing for a share of the market have settled into three camps,” Dinsdale said. “Amazon and Microsoft are in a league of their own, while others are either aggressively seeking to grow their position in the market or are more focused on specific services, geographies or customer groupings.”

For the third quarter, Amazon’s revenue soared 37% to $96.1 billion. Its profit totaled $6.3 billion, triple that of the year-ago quarter.

For its first fiscal quarter of 2021, Microsoft reported $37.2 billion in revenue and nearly $14 billion in profit, compared to $33.1 billion and $10.7 million for year-ago quarter.

Google’s third-quarter revenue rose 14% from a year earlier to $46.2 billion. Its profit soared 59% to $11.2 billion.