The global infrastructure-as-a-service (IaaS) market for public cloud services grew 37.3 percent last year to US$44.5 billion, with the top five IaaS providers – Amazon Web Services (AWS), Microsoft Azure, Google Cloud and China’s Alibaba Cloud and Tencent – accounting for 80 percent of that, according to research firm Gartner.
AWS remained the market leader with an estimated US$19.99 billion in IaaS public cloud services revenue last year, according to Gartner revenue models, and a hold on 45 percent of the worldwide market. Although its revenue grew 29 percent from 2018, its market share decreased from 47.9 percent.
AWS is operating with a very large revenue base and lead, and increasing its growth percentage rate is always going to be a challenge, according to Sid Nag, research vice president at the Stamford, Conn.-based Gartner.
“It’s part of the maturity of the market, where more players are making an investment and also (gaining) a significant amount of traction,” Nag told CRN.
Hangzhou-based Alibaba Cloud -- China’s largest cloud computing provider -- in April announced it would invest the U.S. equivalent of US$28.2 billion in cloud infrastructure and the data center construction in the next three years to help digital transformation efforts in a post-coronavirus (COVID-19) world.
“Clearly you‘re seeing the market maturity and other players start to get in and become a force to reckon with,” Nag said. “You’re also seeing the adoption of multi-cloud in the industry. According to our cloud adoption survey, more than 80 percent of organizations have either adopted multi-cloud or plan to adopt multi-cloud by the end of 2020. With all of those factors, companies like Amazon are going to see some degree of market erosion.”
The top five IaaS providers’ market share increased 3 percent from 2018, when the figure was 77 percent.
Gartner defines IaaS as a “standardized, highly automated offering in which computing resources owned by a service provider, complemented by storage and networking capabilities, are offered to customers on demand.”
“Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas,” Nag said. “It enables technologies such as the edge, AI (artificial intelligence), 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.”
Microsoft Azure And Google Cloud
Microsoft Azure and Google Cloud had explosive growth.
Microsoft Azure, which continued to rank second in Gartner’s IaaS rankings for public cloud services, saw its global market share increase to 17.9 percent last year from 15.6 percent in 2018. Its IaaS public cloud services revenue, meanwhile, increased 57.8 percent to an estimated US$7.94 billion, with more than half coming from North America, as it leveraged its ability to co-sell Azure offerings with other Microsoft products and services to drive adoption, according to Gartner.
Google Cloud, in fourth place behind Alibaba, saw its market share jump to 5.3 percent from 4.1 percent in 2018, as it added industry-specific cloud services for its six target markets of financial services, health care, manufacturing and industrial, the public sector, retail, and media, telecommunications and entertainment. Google Cloud’s IaaS revenue grew 80.1 percent to an estimated US$2.36 billion, with North America accounting for almost half of that revenue, according to Gartner.
China’s Alibaba And Tencent
IaaS public cloud services revenue for third-place Alibaba Cloud grew 62.4 percent to US$4.06 billion last year, up from US$2.5 billion in 2018, based on Gartner’s estimates.
Alibaba Cloud, which is owned by Asia’s most valuable company, saw its global market share increase to 9.1 percent last year, from 7.7 percent in the prior year, according to Gartner.
Tencent – Alibaba’s top rival in China – recorded the highest growth among the top five IaaS vendors in terms of annual revenue. It experienced 101.5 percent revenue growth for IaaS public cloud services last year at US$1.23 billion. Its global market share moved to 2.8 percent from 1.9 percent.
“Tencent is becoming more of an enterprise-grade player, if you will, from a public cloud offering perspective,” Nag said. “Of course, both Tencent and Alibaba operate in a very regulated and protected environment. It’s very hard for North American players to break into the market unless they formulate partnerships with local players.”
U.S. Secretary of State Mike Pompeo targeted the Chinese cloud providers last Wednesday as part of the Trump Administration’s so-called “Clean Network” program to protect U.S. citizens’ and companies’ data from “malign actors such as the Chinese Communist Party.” The aim of the “Clean Cloud” initiative is to prevent that data from being “stored and processed on cloud-based systems accessible to our foreign adversaries through companies such as Alibaba, Baidu and Tencent.”
Gartner Changing Cloud Reporting
Gartner today said it will start combining IaaS and platform-as-service (PaaS) segments into a single category called cloud infrastructure and platform services (CIPS) in future reporting.
“That‘s where we’re headed from an industry perspective and also from a Gartner tracking perspective,” Nag said, noting that tracking IaaS and PaaS as discrete segments doesn’t “reflect reality from a buying behavior perspective on the CIO and IT leaders’ side of the house, and similarly does not reflect the selling behavior of the public cloud providers.”
“It‘s really an integrated bundle consumption model,” he said.
Gartner said the global CIPS market grew 42.3 percent to US$63.4 billion in 2019, up from US$44.6 billion in 2018. Amazon, Microsoft and Alibaba held the top three spots, while Tencent and Oracle tied for the fifth position with 2.8 percent market shares each.
Gartner’s next “Magic Quadrant” report will focus on CIPS, according to Nag.