Kalawin - stock.adobe.com
The global infrastructure-as-a-service (IaaS) market continues to go from strength to strength, buoyed in part by the Covid-19 pandemic and enterprises seeking to digitally transform their operations.
According to Gartner’s latest worldwide (IaaS) market tracker, this segment of the overall cloud market grew by 37.3% in 2019, from $32.4bn the previous year to $44.5bn.
Gartner’s Sid Nag said the growth is indicative of how high a priority moving to the cloud remains for CIOs, as they seek to tap into emerging technologies that work best atop elastic and scalable off-premise infrastructures.
“Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas,” said Nag. “It enables technologies such as the edge, AI, machine learning and 5G, among others. At the end of the day, each of these technologies require a scalable, elastic and high-capacity infrastructure platform like public cloud IaaS, which is why the market witnessed strong growth.”
And this is a trend that is showing no signs of slowing down, continued Nag, as the coronavirus pandemic continues to play out across the world.
“When enterprises were compelled to move their applications to the public cloud as a result of the pandemic, they realised the true benefits of public cloud and it is unlikely that they will change course,” he said.
“In the recovery and rebound phase [of the pandemic], CIOs are recognising that they don’t need to bring workloads back on-premise, which will further increase cloud spending and drive new applications around cloud-hosted collaboration that incorporate emerging technologies such as virtual reality and immersive video experiences.”
AWS leading market
In terms of which suppliers are benefiting most from these trends, Amazon Web Services (AWS) continues to lead the IaaS market with a 45% share, while Gartner estimates suggest it bagged $20bn of the total £44.5bn revenue generated by IaaS spending in 2019.
In second place is Microsoft, whose IaaS operations generated $8bn in revenue last year, with Gartner stating the bulk of this business came from its customers in North America.
“Microsoft’s IaaS offering grew 57.8% in 2019, as the company leveraged its sales reach and ability to co-sell its Azure offerings with other Microsoft products and services in order to drive adoption,” said Gartner.
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Google Cloud also experienced sizeable revenue growth in the region of 80% during 2019, with its IaaS revenue growing from $1.3bn in 2018 to $2.4bn last year, with nearly half of its revenue similarly coming from the North American market.
At the same time, the Gartner data points to a growing dominance within the global IaaS market from Chinese cloud providers, with both Alibaba Cloud and Tencent showing marked surges in revenue between 2018 and 2019.
Alibaba, for example, which is China’s leading IaaS provider achieved 62.4% year-on-year growth in 2019, with its revenue rising from $2.5bn to $4bn between 2018 and 2019. Meanwhile, Tencent, which is China’s second-biggest cloud services provider, grew its IaaS offering by more than 100% during the same period.
Despite growing resistance from the US government towards the use of Chinese technologies, notably Huawei and latterly TikTok, Nag is of the view that Tencent and Alibaba are on course to become a growing competitive threat to the rest of the IaaS market in the years to come.
“As the cloud market matures, and its leaders experience natural market share erosion as a result, China-based providers such as Alibaba, Tencent and Huawei will start to gain more traction,” said Nag.
“It will also be hard for other providers, such as the North America-based cloud providers, to enter the China market given the country’s highly regulated market.”
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