Public Cloud Momentum Pacing Past Forecasts, With AWS, Azure in Lead
We assess the soaring numbers with the help of Gartner, IDC and Synergy Research.
Shutterstock
Depending upon whom you ask, or which industry experts you follow, longtime leader Amazon Web Services continues to rank as the world’s largest public cloud provider.
Over at Gartner, AWS still holds the top spot — for infrastructure as a service, in specific. Analysts made that call after evaluating last year’s overall revenue (a common methodology in the research world, even though we’re now seven months into a new year).
According to Gartner, AWS racked up $35.4 billion in revenue in 2021, giving it almost 39% market share. That put Microsoft Azure in second place again, with 21% share and more than $19 billion in IaaS revenue.
Again, that market-sizing assessment depends on your resource. IDC, for example, said in June that Azure has (again) passed AWS to take the crown.
On June 29, IDC released figures that show Microsoft edging out AWS in 2021 by a close margin — 14.4% market share compared to AWS’ 13.7%.
That growth puts Azure on track to stay in the No. 1 position. That’s per IDC, anyway, which in 2021 also declared Azure the public cloud winner for the prior year with 12.8% revenue share. (For comparison’s sake, over at Synergy Research Group, analysts place AWS ahead of Azure for the first quarter of 2022, with 33% market share.)
If Azure indeed leads the pack, instead of AWS, maintaining that advantage won’t come easily. It stands to reason that Microsoft will have to work hard to maintain its slot. That’s because there’s a lot of competition for customers.
For the most part, organizations have started to clean up the cloud computing messes they made in early 2020 due to COVID-19 and, frankly, throughout the pandemic.
Two years out from that unprecedented global event, CIOs and IT teams know that they cannot willy-nilly deploy cloud resources. They must maintain oversight and control of their environments, for purposes including budgeting, security and privacy. To those ends, a number of organizations are implementing more responsible approaches to cloud.
Because of that, some observers are whispering about the possibility of a slowdown in cloud adoption. But, really, what seems to be happening is a stabilization or a rationalization. Cloud computing is going nowhere. The technology indeed serves as the foundation for modern business.
We like how Sid Nag, research vice president at Gartner, summed up cloud computing demand.
“Cloud is the powerhouse that drives today’s digital organizations,” Nag said in April. “CIOs are beyond the era of irrational exuberance of procuring cloud services and are being thoughtful in their choice of public cloud providers to drive specific, desired business and technology outcomes in their digital transformation journey.”
With that in mind, click to the next slide for projections regarding public cloud computing spending.
Spending on public cloud services in 2022 will outpace 2021’s dollars by almost $84 billion, according to recent stats from Gartner.
Analysts in April said global end-user outlay on IaaS, desktop as a service (DaaS) and platform as a service (PaaS) will approach a mind-boggling $495 billion this year. (OK, we declared the numbers “mind-boggling.”)
Percentage-wise, those figures come out almost 20% higher than 2021. (And get this — in 2023, Gartner expects the figures for IaaS, DaaS and PaaS spending to reach nearly $600 billion.)
Still, in 2022, there’s another public cloud service that promises to claim the most glory. Go to the next slide for more.
Software as a service (SaaS) will emerge the winner when it comes to public cloud services, according to Gartner.
Analysts at the behemoth research firm predict SaaS alone will attain $176.6 billion in end-user spending by year’s end. Cloud marketplaces will play key roles in supporting that adoption, Gartner noted.
Note, though, that Gartner is not the only analyst house bullish on SaaS.
Along with Gartner, IDC places SaaS at the top of the public cloud stack.
“SaaS applications remain the largest and most mature segment of public cloud, with 2021 revenues that have now reached $177 billion,” said Eric Newmark, group vice president and general manager of IDC’s SaaS, enterprise software and worldwide services division.
(Note that IDC’s number dovetails nicely with Gartner’s.)
“The tailwinds of the pandemic continued to fuel expedited upgrades and replacements of older systems in 2021, though company goals haven’t changed,” Newmark added.
For 2022, expect organizations to keep looking for applications “that will help increase enterprise intelligence, improve operational efficiency and drive better decision-making,” Newmark said.
Synergy Research’s analysts see a similar trajectory.
In late June, the firm said enterprise SaaS, along with managed private cloud services and content delivery networks, accounted for $54 billion in first-quarter 2022 services revenue. That figure rose by about 21% over 2021.
None of that comes as a shock, really.
Research analysts’ findings about SaaS should offer little surprise. SaaS fuels organizations’ ability to support remote work and disparate locations, keeping employees connected and productive via the same apps.
Channel Futures expects partners to play a significant part in powering all that momentum. That’s not only because of the benefits organizations gain from relying on SaaS, but also because of the ways in which partners profit. SaaS sales deliver recurring revenue, and provide ease of management for customers and more. Plus, SaaS acts an underlying contributor to partners’ own digital transformation, not just that of their clients.
Next, understand more about the economic forces propelling ongoing cloud computing reliance.
Data centers make cloud computing possible. The technology does not just come from a vendor — providers have to have ways to distribute the services. Enter data centers.
Investors with deep pockets know this, and that’s why many of them are keen on data centers. To that point, Synergy Research has just released analysis that underscores global activity around data center mergers and acquisitions.
Between January and the end of June, 87 deals totaling $24 billion closed. (And that’s in spite of recessionary threats.)
More data center M&A is coming.
Synergy says pending agreements worth $18 billion are expected to close before the end of the year — and that’s even in the face of a global economy that appears more fragile every day.
Who’s behind the frenzy? Find out on the next slide.
In 2022, private equity firms are very, very interested in the data centers that power cloud computing. So far this year, private equity investors have provided 90% of the deal value in the data center sector.
That compares to 42% between 2015 and 2018, and a combined 65% between 2019 and 2021. Indeed, cloud computing continues to prove its merit — and private investors want their share of the bounty.
“There is an ever-increasing demand for data center capacity, driven by rapidly growing cloud markets, aggressive expansion of hyperscale operator networks and continued growth of data-rich digital services,” said John Dinsdale, a chief analyst at Synergy Research Group. “The trouble is that building and operating large fleets of data centers is highly capital intensive. Even the biggest data center operators have had to seek external funding to allow them to meet growth targets while protecting their balance sheets. As the level of resulting M&A activity has shot through the roof, virtually all of the incremental investment has come from private equity.”
There appears to be little slowdown in sight for spending on public cloud computing. Take this forecast from July 2019 as one example: Three years ago, IDC said public cloud spending will have reached almost $500 billion by 2023.
We’ll have already achieved close to that number in 2022, according to Gartner.
So, outlay, then, will actually hit nearly $600 billion by the end of 2023, per a prediction from Gartner.
Expect the growth rates to keep soaring. As proof, take this insight from Synergy Research’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,” Dinsdale said in June. “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.”
What channel partner doesn’t want a slice of that tasty pie?
There appears to be little slowdown in sight for spending on public cloud computing. Take this forecast from July 2019 as one example: Three years ago, IDC said public cloud spending will have reached almost $500 billion by 2023.
We’ll have already achieved close to that number in 2022, according to Gartner.
So, outlay, then, will actually hit nearly $600 billion by the end of 2023, per a prediction from Gartner.
Expect the growth rates to keep soaring. As proof, take this insight from Synergy Research’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,” Dinsdale said in June. “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.”
What channel partner doesn’t want a slice of that tasty pie?
With the second quarter behind us, now strikes us as a swell time to assess public cloud momentum. We say that as cloud dominates much of the technology conversation because of the success of its breakout components — hybrid cloud, multicloud and, yes, public cloud.
Hybrid cloud and multicloud have gained notable traction, especially over the last three years. Yet underneath the majority of those deployments lies undeniable public cloud momentum. These environments – provisioned by the hyperscalers – support a range of capabilities. Those include edge computing to access to a host of applications for business productivity.
With all of that in mind, we run through some significant considerations in terms of public cloud so far this year, and coming up. Channel partners selling cloud services will be interested to take a look at the figures, players and predictions. Click through the slideshow above.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn. |
About the Author(s)
You May Also Like