Global infrastructure as a service (IaaS) spending grew 37.3 per cent last year reaching US$44.5 billion, up from US$32.4 billion in 2018. The figures are from Gartner which also said Amazon retained the top spot position in the IaaS market in 2019, followed by Microsoft, Alibaba, Google, and Tencent.

According to Sid Nag, research vice president at Gartner, “Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas. It enables technologies such as the edge, AI, machine learning and 5G, among others. At the end of the day, each of these technologies requires a scalable, elastic, and high-capacity infrastructure platform like public cloud IaaS, which is why the market witnessed strong growth.”

Market concentration is also growing. Last year the top five IaaS providers accounted for four out of every five dollars spent on the market, up from 77 per cent in 2018. Three-quarters of all IaaS providers exhibited growth in 2018.

Amazon continued to lead the worldwide IaaS market with an estimated US$20 billion of revenue in 2019 and 45% of the total market. Amazon leveraged its No.1 spot in 2018 to build out its capabilities beyond the IaaS layer in the cloud stack and maintain its top position in 2019.

Table 1. Worldwide IaaS Public Cloud Services Market Share, 2018-2019 (Millions of U.S. Dollars)

Company 2019

Revenue

2019 Market

Share (%)

2018

Revenue

2018 Market

Share (%)

2018-2019 Growth (%)
Amazon 19,990.4 45.0 15,495.0 47.9 29.0
Microsoft 7,949.6 17.9 5,037.8 15.6 57.8
Alibaba 4,060.0 9.1 2,499.3 7.7 62.4
Google 2,365.5 5.3 1,313.8 4.1 80.1
Tencent 1,232.9 2.8 611.8 1.9 101.5
Others 8,858 19.9 7,425 22.9 19.3
Total 44,456.6 100.0 32,382.2 100.0 37.3

Source: Gartner (August 2020)

Microsoft remained in the No. 2 position in the IaaS market with more than half of its nearly $8 billion in revenue coming from North America. Microsoft’s IaaS offering grew 57.8 per cent in 2019, as the company leveraged its sales reach and ability to co-sell its Azure offerings with other Microsoft products and services in order to drive adoption.

The dominant IaaS provider in China, Alibaba Cloud, grew 62.4 per cent in 2019 with revenue surpassing US$4 billion, up from $2.5 billion in 2018. Alibaba Group will continue to expand its cloud infrastructure business in the coming years and aim to offer cloud-based intelligent solutions to its customers to support their digital transformation process.

China-based Tencent Also doubled its IaaS revenues in 2019. It is the second-largest provider of cloud services in China, after Alibaba. “As the cloud market matures, and its leaders experience natural market share erosion as a result, China-based providers such as Alibaba, Tencent and Huawei will start to gain more traction. It will also be hard for other providers, such as the North America based cloud providers, to enter the China market given the country’s highly regulated market,” said Mr. Nag.

Google’s IaaS revenue grew from US$1.3 billion in 2018 to $2.4 billion in 2019, experiencing 80.1 per cent growth. Google’s cloud services focused on providing organisations with industry-specific solutions on robust computing infrastructure. North America accounts for nearly half of Google’s IaaS revenue.

Moving forward, Gartner says it will be combining the IaaS and platform as a service (PaaS) segments into a single, complementary platform offering, cloud infrastructure and platform services (CIPS). The worldwide CIPS market grew 42.3% in 2019 to total US$63.4 billion, up from $44.6 billion in 2018. Amazon, Microsoft and Alibaba secured the top three positions in the CIPS market in 2019, while Tencent and Oracle were in a virtual tie for the No. 5 position with 2.8% of the market each.

“There will be a continued push of cloud spending as an outcome of the coronavirus pandemic,” said Nag. “When enterprises were compelled to move their applications to the public cloud as a result of the pandemic, they realised the true benefits of public cloud and it is unlikely that they will change course. In the recovery and rebound phase, CIOs are recognising that they don’t need to bring workloads back on premises, which will further increase cloud spending and drive new applications around cloud-hosted collaboration that incorporate emerging technologies such as virtual reality and immersive video experiences.”

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