bluebay2014 - stock.adobe.com
Covid-19 lockdowns drive global Q2 surge in cloud infrastructure spending
Latest market tracker data from IT analyst house Canalys reveals the impact the coronavirus crisis is having on cloud spending habits worldwide
The onset of Covid-19 lockdowns by governments around the world has led to a 31% surge in spending on cloud infrastructure services globally during the second quarter of 2020, Canalys research shows.
According to the market watcher’s quarterly worldwide cloud infrastructure servicer tracker data, spending in this segment hit $34.6bn during Q2, fuelled by the surge in demand for online collaboration, content streaming, remote learning and e-commerce tools caused by the pandemic.
At the same time, in response to the economic fallout caused by Covid-19, some CIOs have moved to either pause or decelerate their move to the cloud, which has constrained spending growth in this area during Q2, said Canalys.
This trend is one that cloud infrastructure market leader Amazon Web Services (AWS) acknowledged when reporting its Q2 financial results. As reported by Computer Weekly, the firm pointed to the fact that while some enterprises have reacted to the pandemic by seeking to speed up their digital transformation plans, others have had to scale back their IT spending.
However, in the longer term, the analyst house said spending growth rates are likely to rebound as lockdown restrictions are lifted in some countries and more of the economy starts to reopen.
“Cloud-based services were pivotal in enabling emergency continuity plans designed to maintain virtual operations during lockdown,” said Matthew Ball, chief analyst at Canalys. “These will also prove to be critical in the next phase of the response to Covid-19, as economies gradually reopen.
“In addition to supporting continued remote working and distance learning, cloud-based services will underpin the deployment of new digital workflows, such as online booking and ordering systems, as well as other contactless service engagements.”
Cloud will also have a role to play in the technologies that emerge to ensure workplaces can be reopened and made “Covid-secure”, said Ball.
“Monitoring occupancy levels and footfalls as well as contact-tracing will help reopen large offices and education facilities with confidence,” he added. “Demand for cloud-based services will remain strong as organisations accelerate their digital transformation initiatives over the next 12 months to capitalise on new emerging opportunities.”
Read more about cloud spending habits
- Amazon sees profit and revenue surge in the wake of the coronavirus, but growth of its cloud business slows as IT buyers re-prioritise investments because of pandemic.
- The Covid-19 coronavirus pandemic had a huge impact on the demand for cloud services from enterprises worldwide, but how have the cloud giants fared behind the scenes?
Canalys’ data further shows that AWS accounts for 31% of the total amount spent on cloud infrastructure services during Q2 across the globe, while Microsoft’s share of the market hit 20% for the first time during the three months to the end of July. Google remains in third place with a 6% share.
According to Canalys, it looks likely as time goes by that enterprises will seek to source cloud services from a mix of suppliers, based on the strengths and capabilities they demonstrate, as they move more of their IT off-premise over the coming years.
“Differentiation among the leading providers will be critical as competition for customers’ spending on digital transformation projects intensifies,” said Canalys research analyst Blake Murray.
“Security, code development and migration tools, support for multi-cloud and hybrid-IT deployments, as well as enabling more predictable costs, will be key areas of focus as organisations look to move as quickly as possible, minimise disruption and keep within more constrained budgets.”
Murray added: “The top four cloud service providers have maintained the pace of innovation over the last six months and will look to add further capabilities to help win new business. But competition from other cloud service providers will intensify.”