IaaS public cloud services market grew 29.5% in 2017

The worldwide infrastructure as a service (IaaS) market grew almost 30 percent in 2017 to total 23.5 billion USD, up from 18.2 billion in 2016, according to research firm Gartner. Amazon was the No. 1 vendor in the IaaS market in 2017, followed by Microsoft, Alibaba, Google and IBM.

“The top four providers have strong IaaS offerings and saw healthy growth as IaaS adoption is being fully embraced by mainstream organisations and as cloud availability expands into new regions and countries,” said Sid Nag, research director at Gartner. “Cloud-directed IT spending now constitutes more than 20 percent of the total IT budget for organizations using cloud. Many of these organisations are now using cloud to support production environments and business-critical operations.”

In the IaaS market, the competitive landscape is consolidating around the leaders. The top four providers are all hyperscale IaaS providers and represent almost 75 percent of the total IaaS market and 47 percent of the combined IaaS and infrastructure utility services (IUS) market.

Amazon is the clear leader with an estimated 12.2 billion revenue in 2017, up 25 percent from 2016 (see table). The largest of the IaaS providers, Amazon is also the most mature, enterprise-reay provider, with the strongest track record of customer success and the most useful partner ecosystem. Growth in 2017 was driven not only by customers that are migrating from traditional data centers to cloud IaaS, but also by customers implementing transformational digital business projects, reflecting its broad range of use cases.

2017 Revenue 2017 Market Share (%) 2016 Revenue 2016 Market Share (%) 2017-2016 Growth (%)
Amazon 12,221 51.8 9,775 53.7 25.0
Microsoft 3,130 13.3 1,579 8.7 98.2
Alibaba 1,091 4.6 670 3.7 62.7
Google 780 3.3 500 2.7 56.0
IBM 457 1.9 297 1.6 53.9
Others 5,902 25.0 5,392 29.6 9.5
Total 23,580 100.0 18,213 100.0 29.5

Worldwide IaaS public cloud services market share, 2016-2017 (millions of USD).
Source: Gartner, August 2018

Note: In 2018 Gartner adjusted its categorisation of market share data. This resulted in a more accurate statement of the 2016 IaaS numbers and shows a natural flattening of share distribution.

Microsoft secured the No. 2 position in the IaaS market with growth of more than 98 percent on its IaaS offering, with revenue surpassing 3.1 billion in 2017. Microsoft delivers its IaaS capabilities through its Microsoft Azure offering, which is a collection of infrastructure and platform services.

In the third spot, Alibaba’s 2017 growth of 63 percent reflects the company’s successful investment in research and development (R&D). Alibaba has the financial capability to continue this trend and invest in global expansion, giving the company potential to become over time an alternative to the global hyperscale cloud providers in select regions.

“This reflects a fundamental change in what and how organisations are consuming technology. Some legacy infrastructure offerings, such as IUS, are seeing lower and slower uptake that impacts the combined IaaS and IUS market,” Mr. Nag said. “Additionally, a groundswell of demand for cloud-skilled personnel is forcing technology providers to change how they compete to meet this exploding demand.”

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