The IDC Worldwide Semiannual Public Cloud Services Tracker estimates worldwide public cloud services market, including Infrastructure as a Service (IaaS), System Infrastructure Software as a Service (SISaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), at US$312 billion, up 24.1% from 2020.
Spending continued to consolidate in 2020 with the combined revenue of the top 5 public cloud service providers (Amazon Web Services, Microsoft, Salesforce.com, Google, and Oracle) capturing 38% of the worldwide total and growing 32% year over year.
Rick Villars, group vice president, Worldwide Research at IDC said access to shared infrastructure, data, and application resources in public clouds played a critical role in helping organizations and individuals navigate the disruptions of the past year.
"In the coming years, enterprises' ability to govern a growing portfolio of cloud services will be the foundation for introducing greater automation into business and IT processes while also becoming more digitally resilient," he continued.
IaaS and PaaS opportunities
While the overall public cloud services market grew 24.1% in 2020, consistent with the past four years, the IaaS and PaaS segments have consistently grown at much faster rates.
This highlights the increasing reliance of enterprises on a cloud foundation built on cloud infrastructure, software defined data, compute and governance solutions as a Service, and cloud-native platforms for application deployment for enterprise IT internal applications.
IDC expects spending on foundational cloud services (especially IaaS and PaaS) to continue growing at a higher rate than the overall cloud market as resilience, flexibility, and agility guide IT platform decisions.
"Cloud service providers are rapidly expanding their portfolio of infrastructure and platform services to address confidential computing, performance intensive computing, and hybrid deployment scenarios," said Dave McCarthy, vice president, Cloud and Edge Infrastructure Services.
He noted that extending these foundational cloud services to customer premises and communications networks enables a broader set of use cases than previously possible.
Lara Greden, research director, Platform as a Service, said the high pace of growth in PaaS, IaaS, and SISaaS 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," she added.
SaaS applications is the largest and most mature segment of public cloud with 2020 revenues of $148 billion.
"Organizations across industries hastened the replacement of legacy business applications with a new breed of SaaS applications that is data-driven, intuitive, composable, and ideally suited for more distributed cloud architectures. Organizations looking for industry-specific applications can choose from a growing assortment of vertical applications. The SaaS apps market is dominated by a longtail of providers that account for 65% of the total market," said Frank Della Rosa, research director, SaaS and Cloud Software.
Healthy long tail
Despite the dominance of the big five public cloud providers, there continues to be a healthy long tail, representing 49% of the market total. These are companies with targeted use case-specific PaaS services or cross-cloud compute, data, or network governance services.
The long tail is even more pronounced in SaaS, where customers growing focus on specific outcomes ensures that over two-thirds of the spending is captured outside the top 5.