Worldwide IaaS public cloud services market grew over 31 percent in 2018
The worldwide infrastructure as a service (IaaS) market grew 31.3 percent in 2018 to total 32.4 billion dollars, up from 24.7 billion in 2017, according to Gartner. Amazon was once again the number 1 vendor in the IaaS market in 2018, followed by Microsoft, Alibaba, Google and IBM.
“Despite strong growth across the board, the cloud market’s consolidation favours the large and dominant providers, with smaller and niche providers losing share,” said Sid Nag, research vice president at Gartner. “This is an indication that scalability matters when it comes to the public cloud IaaS business. Only those providers who invest capital expenditure in building out data centers at scale across multiple regions will succeed and continue to capture market share. Offering rich feature functionality across the cloud technology stack will be the ticket to success, as well.”
In 2018, the top five IaaS providers accounted for nearly 77 percent of the global IaaS market, up from less than 73 percent in 2017. Market consolidation will continue through 2019, driven by the high rate of growth for the top providers, which experienced aggregate growth of 39 percent from 2017 to 2018 compared with the more modest growth of 11 percent for all other providers during the same period. “Consolidation will occur as organisations and developers look for standardised, broadly supported platforms for developing and hosting cloud applications,” said Mr. Nag.
Amazon continued to lead the worldwide IaaS market with an estimated 15.5 billion of revenue in 2018, up 27 percent from 2017 (see table). The largest of the IaaS providers, Amazon accounts for nearly half of the total IaaS market. It continues to aggressively expand into new IT markets via new services, as well as acquisitions, growing its core cloud business.
Microsoft secured the second position in the IaaS market with revenue surpassing 5 billion in 2018, up from 3.1 billion in 2017. Microsoft delivers its IaaS capabilities through its innovative and open Azure offering, which continues to solidify its position as a leading IaaS provider.
The dominant IaaS provider in China, Alibaba Cloud, experienced the strongest growth among the leading vendors, growing 92.6 percent in 2018. The company has built an ecosystem consisting of managed service providers (MSPs) and independent software vendors (ISVs). Its success last year was driven by aggressive R&D investment in its portfolio of offerings, especially compared with its hyperscale provider counterparts. Alibaba has the financial capability to continue this trend and invest in global expansion.
Google came in at the number 4 spot, growing 60.2 percent in revenue from 2017. “Google’s cloud offering is something to keep an eye on with its new leadership focus on customers and shift toward becoming a more enterprise-geared offering,” said Mr. Nag.
“As the cloud business continues to gather momentum and hyperscale cloud providers consolidate the market, product managers at cloud MSPs must look at other ways to differentiate, such as focusing on vertical industries and getting certified in the hyperscale cloud provider partner programs in order to drive revenue,” said Nag.