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We all know the overall cloud services and software business is growing at warp speed, but it can be beneficial to enterprise decision-makers if experts break down the categories (SaaS, IaaS, PaaS and others) for more clarity.
Industry analyst Gartner Inc. reported Aug. 10 that the worldwide infrastructure as a service (IaaS) market grew a whopping 37.3% in 2019 to total $44.5 billion, up from $32.4 billion in 2018.
To the surprise of few industry observers, Amazon retained the No. 1 position in the IaaS market in 2019, followed by Microsoft, Alibaba, Google and Tencent.
In 2019, the top five IaaS providers accounted for 80% of the market, up from 77% in 2018. Three-quarters of all IaaS providers had exhibited growth in 2018.
Amazon continued to lead the worldwide IaaS market with an estimated $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.
“Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas,” Sid Nag, research vice president at Gartner, said in a media advisory. “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.”
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% 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% in 2019 with revenue surpassing $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 grew its IaaS offering by over 100% 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,” Nag said.
Google’s IaaS revenue grew from $1.3 billion in 2018 to $2.4 billion in 2019, showing 80.1% growth. Google’s cloud services focused on providing organizations with industry specific solutions on robust computing infrastructure. North America accounts for nearly half of Google’s IaaS revenue.
In the future, Gartner 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 $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.
More information can be found in the report “Market Share: Enterprise Public Cloud Services, Worldwide, 2019” for Gartner clients.