The worldwide public cloud services market grew 29 per cent in 2017, with customers spending US$117 billion in the space of 12 months.
According to IDC research, while the overall growth rate in 2017 was “marginally lower” than 2016, revenue growth of the top 16 providers by market share increased during the period.
Including the usual suspects of Amazon Web Services, Microsoft and Google, in addition to IBM, Salesforce, Oracle and Alibaba, the leading players continued to dominate the public cloud services market.
Of note the channel, their cumulative share of the market went from 47.9 per cent in 2016 to 50.7 per cent in 2017, accounting for just over half of all the worldwide public cloud services spending.
“2017 was a pivotal year in the expansion of public cloud service adoption,” said Frank Gens, senior vice president and chief analyst at IDC. “This came as public cloud services continued to defy the usual laws of market gravity.”
For the fifth straight year, Gens said spending growth remained at a “scorching” 29 per cent, with the size of the market tripling over that time.
“2017 also saw some intriguing market share shifts among the major players, as all of them have significantly increased their focus on the cloud, and competitive pressure has ratcheted way up,” Gens added.
“The next three years will determine IT industry leadership for the next two decades and beyond.”
From a technology standpoint, the software-as-a-service (SaaS) segment was characterised by supplier consolidation, maturing customer adoption, and steady growth.
Delving deeper, enterprise resource management (ERM), customer relationship management (CRM) and collaboration applications contributed the most to SaaS growth, accounting for 64 per cent of all SaaS-delivered applications.
Meanwhile, supply chain management (SCM) and content applications represented the fastest growing categories of SaaS applications at 27 per cent and 28 per cent respectively in 2017.
“The SaaS delivery model accounts for 68 per cent of worldwide public cloud services revenue,” IDC research director of SaaS and cloud, Frank Della Rosa, added. “SaaS applications continue to grow at a respectable 22 per cent, reaching US$75 billion in 2017 and forecast to reach US$163 billion by 2022.”
As explained by Della Rosa, in the system infrastructure software (SIS) category, security SaaS accounts for 42 per cent of all revenue, with a five-year growth rate of 13 per cent through 2022.
“While new SaaS companies launch regularly, technology mainstays like Salesforce, Microsoft, and Oracle remain atop the list of SaaS providers,” Della Rosa said.
In the platform-as-a-service (PaaS) segment, year-over-year growth slowed slightly to 47 per cent from 48 per cent in 2016, reaching a little over US$17 billion in revenues in 2017.
Looking ahead, IDC expects this growth to continue as awareness of new development methods expands while the barriers to public cloud adoption decrease.
“Demand for applications has continued to fuel the growth of PaaS services to improve developer productivity,” IDC research director of PaaS, Larry Carvalho, added. “Emerging technologies like containers and serverless computing are changing the delivery and consumption model of PaaS services.
“As more companies demonstrate value from platforms, adoption rates will remain high in the near future.”
In the infrastructure-as-a-service (IaaS) segment, enterprise adoption and growth in new regions continues to drive worldwide growth of IaaS revenue.
Despite the growth in revenue, revenue growth itself has slowed – to 40 per cent in 2017, down from 45 per cent in 2016 – as the market reached a total size of just under US$25 billion in 2017.
“Enterprise usage of public cloud IaaS is still in its early phase,” IDC research director of IaaS, Deepak Mohan, said. “There is strong interest among enterprise IT organisations to increase use of public cloud IaaS and the major providers continue to address barriers for large scale adoption.
“These factors will continue to drive workload deployments in public cloud IaaS, and the market can be expected to grow at the current rate for at least the next two years.”