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Synergy Research Group hails 2018 as standout year for cloud infrastructure market growth

The financial performance of the big cloud giants during the last quarter of 2018 prompts market watcher Synergy Research Group to declare it a "banner year" for the market

The cloud market is continuing to surpass analyst expectations, as research shows the market grew at a faster rate in 2018 than over the course of the previous 12 months.

According to Synergy Research Group’s fourth quarter analysis of the cloud infrastructure services market, Amazon, Microsoft, Google and Alibaba all achieved “substantial” market share gains over the course of 2018, fuelled by enterprise demand for public cloud.

Evidence of this can be found in the recent run of financial results Amazon, Microsoft and Google have all put out over the course of the past week, with all three firms hailing the performance of their cloud units.

Amazon Web Services (AWS) reported a 45% year-on-year growth in revenue for its fourth quarter results, while Microsoft’s achieved an annual revenue growth rate for its Azure public cloud of 76% during its second quarter.

While Google does not provide a separate breakdown of how its cloud business fares within its results, the segment where it includes details of that reported 31% year-on-year revenue growth overall.

The aforementioned market share gains are likely to have come at the expense of the smaller providers, with Synergy reporting a collective five percentage point drop in market share among the small and medium-sized enterprise (SME) cloud community over the course of the past four quarters.  

As it stands, AWS leads the market with 34% share, followed by Microsoft (15%), Google (7%), IBM (7%) and Alibaba (5%).

What is surprising about the 2018 figures, according to Synergy, is how quickly the market is continuing to grow as a whole, despite its size.

“Growth rates will inevitably tail off over the coming years due to the law of large numbers, but 2018 was a really strong year for the cloud market,” said John Dinsdale, chief analyst at Synergy Research Group.

“Q4 tops off a banner year for the cloud market with the annual growth rate actually nudging up from the previous year, which is an unusual phenomenon for a high-growth market of this scale.” 

The full-year growth of the market was up 48% year-on-year in 2018, with Synergy’s projections suggesting that nearly $70bn was collectively generated in revenue by the cloud infrastructure giants over the course of 2018, with $20bn of that occurring within the fourth quarter alone.

“The rate at which the market leaders continue to expand is really rather impressive. In aggregate, the top five drove up their revenues in these segments by 60% in 2018, which has caused us to review and increase our five-year forecast for the market,” said Dinsdale.

“Inevitably there will be a few road bumps along the way, but these will be minor relative to the factors that continue to drive the market,” he added.

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