Public IT Cloud Services Spending to Reach $108 Billion by 2017: IDC

The United States will remain the largest public IT cloud services market, although its share will decline from 56.9 percent in 2013 to 43.9 percent in 2017.

Over the 2013–2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5 percent, five times that of the IT industry as a whole, and worldwide spending on public IT cloud services will reach $47.4 billion in 2013 and is expected to be more than $107 billion in 2017, according to a new forecast from IT research firm IDC.

By 2017, IDC expects public IT cloud services to drive 17 percent of IT product spending and nearly half of all growth across five technology categories--applications, system infrastructure software, platform as a service (PaaS), servers and basic storage.

Software as a service (SaaS) is projected to remain the largest public IT cloud services category throughout the forecast, capturing 59.7 percent of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7 percent and 27.2 percent, according to the study, titled the "Worldwide and Regional Public IT Cloud Services 2013-2017 Forecast."

The United States will remain the largest public IT cloud services market, although its share will decline from 56.9 percent in 2013 to 43.9 percent in 2017 while Western Europe, Latin America and Asia/Pacific will each gain share throughout the forecast. Cloud spending in emerging markets is expected to experience a CAGR of 37.3 percent for the 2013-2017 period, a rate almost twice that of developed markets, the report projected.

"The first wave of cloud services adoption was focused on improving the efficiency of the IT department," Frank Gens, senior vice president and chief analyst at IDC, said in a statement. "Over the next several years, the primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings. The emergence of cloud as the core for new 'business-as-a-service' offerings will accelerate cloud adoption and dramatically raise the cloud model's strategic value beyond CIOs to CXOs of all types."

As cloud computing enters a phase of growth where adoption will not only be much bigger, but also more user- and solution-driven, the cloud and the other third platform technologies, such as mobile, social and big data, are expected to become even more interdependent as they continue to drive growth and innovation across all industries that depend on IT.

"In this second phase of cloud development, it will be essential for cloud services providers to reexamine their cloud strategies, preparing for a marketplace focused intensely on business innovation, industry transformation and increasingly pressured pricing and operating models," Gens said. "How suppliers navigate the next two years will tell us a lot about who the IT market leaders will be for the next two decades."

The report also noted an important factor driving growth in public IT cloud services spending is the expanding variety of cloud deployment options. For example, the emergence of virtual private cloud (VPC) offerings has helped to shift momentum from dedicated private cloud offerings toward public offerings, and are addressing many of the objections that have held customers back from the cloud model.