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Home Management Leadership Operations

Gartner: Cloud shifts to business disruptor

FutureCIO Editors by FutureCIO Editors
July 26, 2023
Photo by Scott Webb: https://www.pexels.com/photo/white-and-blue-building-during-daytime-27406/

Photo by Scott Webb: https://www.pexels.com/photo/white-and-blue-building-during-daytime-27406/

The worldwide infrastructure as a service (IaaS) market grew 29.7% in 2022, to total $120.3 billion, up from $92.8 billion in 2021. Gartner says Amazon retained the No. 1 position in the IaaS market in 2022, followed by Microsoft, Alibaba, Google and Huawei.

Sid Nag

“Cloud has been elevated from a technology disruptor to a business disruptor,” said Sid Nag, VP analyst at Gartner.

“IaaS is driving software-as-a-service (SaaS) and platform-as-a-service (PaaS) growth as buyers continue to add more applications to the cloud and modernise existing ones.”

Sid Nag

Nag observed that IaaS growth in 2022 was stronger than expected, despite a slight softening in the fourth quarter as customers focused on using their previously committed capacity to its fullest potential.

“This is expected to continue until mid-2023 and is a natural outcome of the market’s maturity. We expect an acceleration in 2024, as there is still room for plenty of additional future growth,” added Nag.

The competitive landscape

In 2022, the top five IaaS providers accounted for over 80% of the market. Amazon continued to lead the worldwide IaaS market with revenue of US$48.1 billion and 40% market share (see Table 1).

Table 1. Worldwide IaaS public cloud services market share, 2021-2022 (U.S. Millions)

Source: Gartner (July 2023)

Microsoft followed in the No. 2 position with a 21.5% share, reaching over US$25 billion in IaaS public cloud revenue in 2022. Microsoft’s software-first strategy continued to support its IaaS growth as customers required more cloud capacity to support automation, advanced analytics and digital workplace capabilities.

Alibaba Group again held the No. 3 position with a 7.7% market share, although with modest 2.4% year-over-year growth. While Alibaba continued to lead the IaaS market in China, its limited potential for expansion across global markets has slowed growth, driving its recent decision to spin off its Alibaba Cloud business into a separate entity.

Google saw the highest growth rate of the top five IaaS vendors, growing 41% in 2022 to reach over US$9 billion in revenue. Google’s increased investment in sovereign cloud and expanded sales and marketing partner programs helped to broaden its customer base and drive additional IaaS revenue.

Huawei rounded out the top five IaaS vendors with a 4.4% market share and US$5.2 billion in revenue for 2022. Since its 2020 pivot to an increased focus on the cloud, Huawei has been steadily growing its IaaS revenue in China and emerging markets.

In the years ahead

Nag expects generative AI to continue to drive the cloud market forward, particularly as hyperscalers look to support offerings beyond the existing, democratised generative AI solutions.

“As enterprises integrate generative AI into their technology portfolio, new markets and opportunities for cloud hyperscalers will emerge related to sovereignty, ethics, privacy and sustainability,” he continued.

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Tags: cloudGartnerIaaS
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