According to the International Data Corporation’s Worldwide Semiannual Public Cloud Services Tracker, the global cloud computing market reached $312 billion in 2020. This was a 24.1% year-over-year growth compared to 2019.
This market not only includes public cloud services but also system-infrastructure-software-as-a-service (SISaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) and software-as-a-service (SaaS).
The ‘Big Five’
A large portion of the global market was found to be dominated by five major cloud service providers. These are Microsoft, Amazon Web Services, Oracle, Google, and SalesForce.com who together capture 38.5% of the global market. This represents year-on-year growth of 32%.
Microsoft’s expanding portfolio of SiaaS and Iaas offerings was mainly responsible for their huge growth. For the first time, they were able to match Amazon Web Services’ market capture with both companies holding 12.8% revenue share for the year.
This is no surprise as these are the largest cloud service providers around the globe. They also represent the overwhelming dominance of North American corporations in the market. The region boasted a market size of over $78.28 billion in 2020.
In fact, of the 10 biggest companies in the cloud computing market, only Alibaba and Germany’s SAP SE are located outside the United States. North American dominance can be credited to the region’s extremely favourable research and regulatory environment, coupled with increased adoption of advanced cloud technologies based on Machine Learning (ML) and Artificial Intelligence (AI). As a result, North America is forecasted to continue dominating the cloud services market for the foreseeable future.
There is however some significant developments from other regions of the globe. Germany’s SAP SE launched SAP HANA, an integrated cloud service with advanced data and analytics capabilities. This is bound to upset the established order in Europe’s cloud analytics market, at least.
In the Middle East, Bahrain became the first country in the region where Amazon’s cloud computing division, Amazon Web Services, was introduced. In Asia as a whole, we are bound to see significant growth in the demand for cloud services. These can be served by regional players such as India’s HCL Technologies Limited (Noida, India) and Paytm (Uttar Pradesh, India) who already occupy positions in the top 20 biggest players in the market.
IaaS and PaaS Surge on
It is also important to note that Iaas and Paas segments of the computer market have grown at faster rates than the public cloud market which has enjoyed a consistent 20% year-on-year growth for the past four years.
Such numbers indicate an increasing reliance on services built on cloud infrastructure, software-defined data, compute and governance solutions as a service, and cloud-native platforms for application deployment for enterprise internal applications. In the report, IDC predicts that IaaS and Paas will continue to grow at a faster rate than the overall cloud market due to their flexibility and resilience.
Lara Greden, Research Director of Platform-as-a-Service at IDS, says: “The high pace of growth in PaaS, IaaS and SISaaS, which combined account for about half of the public cloud services market, reflects the demand for solutions that accelerate and automate the development and delivery of modern applications. As organizations adopt DevOps approaches and align according to value streams, we are seeing PaaS, IaaS and SISaaS solutions become increasingly adopted and, at the same time, grow in the range of services and thus value they provide. Innovations in edge and IoT use cases are also contributing to the faster rates of growth in these markets.”
Although the top five companies continue to dominate the cloud market there is also a very healthy long tail that represents almost half the market. Startups like YouCloud offer specified cloud services that behemoths like Oracle are be unable to offer.
This tail is concentrated on Saas where the demand for specified outcomes will continue to ensure that up to two-thirds of global spending on cloud is outside the top five.