Forthcoming public cloud boom to be owned by the few

Published on the 26/04/2018 | Written by Newsdesk

Latest Gartner forecast predicts public cloud revenue to surge, shared among a handful of major players…

Gartner is predicting the worldwide public cloud services market to grow by 21.4 percent in 2018 to a total of US$186.4 billion, up from US$153.5 billion in 2017. That’s thanks to – in part – the ferocious growth of cloud IaaS which alone is forecast to swell almost 40 percent this year to reach US$40.8 billion.

Predictably, the top 10 providers to likely account for nearly 70 percent of the IaaS market by 2021, up from 50 percent in 2016.

“The increasing dominance of the hyperscale IaaS providers creates both enormous opportunities and challenges for end users and other market participants,” says Sid Nag, research director at Gartner.

Such a state of affairs has its risks, comments Nag, as market power and influence becomes concentrated in the hands of a few dominant players.

“While it enables efficiencies and cost benefits, organisations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market.”

“Organisations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market.”

“In response to multicloud adoption trends, organisations will increasingly demand a simpler way to move workloads, applications and data across cloud providers’ IaaS offerings without penalties.”

According to the report SaaS remains the largest segment of the cloud market, with revenue expected to grow 22.2 percent to reach US$73.6 billion in 2018. Gartner expects SaaS to reach 45 percent of total application software spending by 2021.

“In many areas, SaaS has become the preferred delivery model,” says Nag. “Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes.”

Within the PaaS category, the fastest-growing segment is database platform as a service (dbPaaS), expected to reach just under US$10 billion by 2021, as hyperscale providers start offering the service.

“Although these large vendors have different strengths, and customers generally feel comfortable that they will be able to meet their current and future needs, other dbPaaS offerings may be good choices for organisations looking to avoid lock-in,” says Nag.

Table 1. Worldwide Public Cloud Service Revenue Forecast (Billions of U.S. Dollars)

2017 2018 2019 2020 2021
Cloud Business Process Services (BPaaS) 42.6 46.4 50.1 54.1 58.4
Cloud Application Infrastructure Services (PaaS) 11.9 15.0 18.6 22.7 27.3
Cloud Application Services (SaaS) 60.2 73.6 87.2 101.9 117.1
Cloud Management and Security Services 8.7 10.5 12.3 14.1 16.1
Cloud System Infrastructure Services (IaaS) 30.0 40.8 52.9 67.4 83.5
Total Market 153.5 186.4 221.1 260.2 302.5

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.

Source: Gartner (April 2018)

Gartner expects growth rates to stabilise from 2018 onward, reflecting the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.

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