Global IaaS Revenue Hits Record, AWS Keeps Public Cloud Crown

Doom and gloom be darned. Global demand for infrastructure as a service soared almost 30% last year, despite non-stop predictions that public cloud computing consumption would slow.

Along the way, Amazon Web Services retained its position as king of the public cloud market. Microsoft Azure held onto its No. 2 spot, while China’s Alibaba kept its third-place ranking. Google Cloud remained fourth, while Huawei, based in China, sits in fifth.

That new data comes from research firm Gartner. Analysts found that organizations worldwide used almost 30% more IaaS in 2022 than they did in 2021. In dollars, that amounted to $120.3 billion in revenue, compared to $92.8 billion.

And there’s something significant about that.

IaaS Annual Revenue Surpasses $100 Billion for First Time

Gartner’s Sid Nag

This marks the first time in the history of public cloud that IaaS annual revenue has exceeded $100 billion, Gartner said. And that’s because cloud “has been elevated from a technology disruptor to a business disruptor,” said Sid Nag, vice president analyst at Gartner.

Indeed, public cloud has proven its mettle since finding its footing amid COVID-19. Yet as the pandemic waned, industry observers started forecasting significant reductions in cloud usage as organizations better optimized or sometimes withdrew their spending. However, fears that public cloud computing would experience a widespread reversal appear to have been overblown. With COVID-19 in the rearview mirror, organizations continue to rely on public cloud computing to support innovation and differentiation — including for the much-discussed growth around generative AI.

To be sure, that technology, in particular, “will continue to drive the cloud market forward,” Nag said.

As enterprises adopt generative AI, Nag added, “new markets and opportunities for cloud hyperscalers will emerge related to sovereignty, ethics, privacy and sustainability.”

Similarly, IaaS serves as the underlying driver of growth for both software and platform as a service, Gartner found.

“[B]uyers continue to add more applications to the cloud and modernize existing ones,” Nag said.

2022’s IaaS Growth ‘Stronger Than Expected’

Overall, IaaS growth in 2022 came in “stronger than expected,” Nag said. And that, he said, happened “despite a slight softening in the fourth quarter as customers focused on using their previously committed capacity to its fullest potential. This is expected to continue until mid-2023 and is a natural outcome of the market’s maturity.”

Perhaps most importantly for channel partners is Nag’s assessment of public cloud demand for the coming years.

“We expect an acceleration in 2024, as there is still room for plenty of additional future growth,” he said.

Where AWS, Azure, Google Cloud and Others Rank in the Global Public Cloud Wars

In terms of the top providers, just five IaaS companies accounted for more than 80% of the market in 2022.

Again, AWS stood out as the IaaS leader, with $48.1 billion in revenue and 40% market share, per Gartner.

Microsoft Azure came in at No. 2 with 21.5% share. It reaped more than $25 billion in IaaS public cloud revenue in 2022. Gartner said Microsoft’s software-first strategy continued to support its IaaS growth as customers used cloud for automation, advanced analytics and digital workplace capabilities.

Alibaba Group, meanwhile, maintained its No. 3 position with 7.7% market share, even with its “modest,” per Gartner, 2.4% year-over-year growth. The public cloud provider leads the IaaS market in China but its limited ability to expand worldwide, due to various countries’ security concerns, is inhibiting its growth, Gartner found. The business impact of that slowdown recently spurred Alibaba executives to spin off Alibaba Cloud into a separate entity.

Up next, Google Cloud saw the highest growth rate of the top five IaaS vendors Gartner analyzed. Its growth rate reached 41% in 2022, topping $9 billion in revenue. Gartner credited Google Cloud’s investment in sovereign cloud, and more sales and marketing partner programs, for those increases.

Finally, Huawei rounded out the top five IaaS vendors with 4.4% market share and $5.2 billion in revenue for 2022. Gartner said that since its 2020 shift to focus more on cloud, the vendor has steadily boosted its IaaS revenue in China and emerging markets.

Of interest is that Oracle Cloud did not appear on Gartner’s list, even as the Larry Ellison-founded company comes into its own as a hyperscaler. Gartner did say that “other” public cloud providers contributed $22.7 billion toward the record $120.3 billion revenue number. That amount compares to $18.6 billion in 2021.