Covering Scientific & Technical AI | Saturday, December 14, 2024

The Cloud Services Market is Booming 

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Enterprise cloud spending far outpaces investments in other IT infrastructure, according to a mid-year assessment that pegs cloud spending at a healthy $150 billion.

Synergy Research Group reported this week that cloud services and infrastructure spending across seven market segments grew 24 percent over the first half of 2018. Infrastructure and platform services led the way, surging 44 percent year-on-year, following by enterprise software services delivered via cloud (up 27 percent).

“Cloud-associated markets are growing at rates ranging from 10 percent to well over 40 percent, and annual spending on cloud will double in under four years,” said John Dinsdale, a chief analyst at Synergy Research Group. “Cloud is increasingly dominating the IT landscape.”

The surge in cloud spending is being driven in part by the enterprise embrace of hybrid private and public cloud deployments and the use of multiple public cloud providers to avoid vendor lock-in. While Amazon Web Services (NASDAQ: AMZN) continues to led the public cloud section by a wide margin, the shift of multi-cloud deployments has created openings for top-tier rivals Microsoft Azure and Google Cloud. Both are steadily offering new cloud services designed to differentiate their infrastructure offerings from market leader AWS.

Synergy Research reported in February that AWS maintained a huge market share lead over Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOGL) and IBM (NYSE: IBM), alone accounting for more than one-third of the cloud infrastructure services market. Cloud infrastructure revenues totaled $70 billion in 2018, the market tracker said.

During the first half of this year, cloud hardware and software spending alone approached $55 billion, evenly divided between private and public clouds. Those infrastructure investments by cloud service providers has so far this year generated more than $90 billion in revenues for infrastructure, platform and hosted private cloud services, Synergy said.

Those heavy investments also have translated into healthy spending on datacenter leasing and co-location services.

Along with the aforementioned cloud market leaders, the market researcher noted that Cisco Systems, Dell EMC and Hewlett Packard Enterprise are among the leading suppliers of cloud infrastructure. Chinese cloud giant Alibaba ranked fifth at the end of last year, according to Synergy Research estimates.

Steady demand for emerging services like cloud databases and analytics are creating openings for other players. The market analysts identified Salesforce, Adobe, VMware, Digital Realty, Equinix and Rackspace as “major players” as the cloud services market continues to boom. Together, those vendors accounted for more than half of all cloud-related revenues during the first half of this year.

The enterprise rush to the cloud continues to shake up the datacenter business. “The flip side is that some traditional IT players are having a hard time balancing protection of legacy businesses with the need to fully embrace cloud,” Synergy Research noted.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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