Gartner and Synergy studies show continued cyclical cloud spend
The cloud industry continues to go up and up – both in terms of global public cloud revenue and spending on data centre hardware and software.
Those are the key findings from two separate research studies, from Gartner and Synergy Research respectively.
Gartner found the worldwide public cloud services market is set to hit $214.3 billion (£164.1bn) in 2019, up 17.5% from the previous year. The primary category will remain SaaS – or cloud application services as Gartner puts it – expecting to account for almost $95bn of that figure this year and $143.7bn by 2022. Yet the fastest growing category will be infrastructure as a service (IaaS), almost doubling in revenue between 2019 and 2022.
In total, SaaS contributes 44% of overall spending today, with cloud business process services (BPaaS) at 23%, IaaS at 18% and platform as a service (PaaS) at 8.8%. Gartner predicts SaaS’ share to be broadly similar by 2022 at 43%, while IaaS rises to 23%, and PaaS at 9.6%.
“At Gartner, we know of no vendor or service provider today whose business model offerings and revenue growth are not influenced by the increasing adoption of cloud-first strategies in organisations,” said Sid Nag, research vice president at Gartner. “What we see now is only the beginning, though. Through 2022, Gartner projects the market size and growth of the cloud services industry at nearly three times the growth of overall IT services.”
Synergy, meanwhile, found that worldwide spend on data centre hardware and software grew by 17% last year. The continued demand for public cloud services is driving this spend, with more extensive server configurations ramping up enterprise selling prices. Public cloud demand grew 30% while private cloud – or cloud-enabled – went up 23%. For traditional ‘non-cloud’ there was no change year on year.
Looking at the runners and riders, Dell EMC and Cisco took the top two slots in the vendor space for public cloud, with HPE and Huawei tied for third. Original design manufacturers (ODM) account for the most market share. In private cloud, Dell EMC again came out on top, ahead of Microsoft and HPE tied for silver, and Cisco.
“Cloud service revenues continue to grow by almost 50% per year, enterprise SaaS revenues are growing by 30%, search [and] social networking revenues are growing by almost 25%, and eCommerce revenues are growing by over 30% - all of which are helping to drive big increases in spending on public cloud infrastructure,” said John Dinsdale, a chief analyst at Synergy.
“We are also now seeing some reasonably strong growth in enterprise data centre infrastructure spending, with the main catalysts being more complex workloads, hybrid cloud requirements, increased server functionality and higher component costs,” Dinsdale added. “We are not seeing much unit volume growth in enterprise, but vendors are benefiting from substantially higher average selling prices.”
These two research reports show that cloud spending is a virtuous circle. Organisations feel an increasing demand for cloud services and adoption; this revenue implores greater capex from the vendors in their infrastructure; and this in turn leads to higher data centre hardware and software spending in general.
“Organisations need cloud-related services to get onboarded onto public clouds and to transform their operations as they adopt public cloud services,” added Nag. “As cloud continues to become mainstream within most organisations, technology product managers for cloud-rated service offerings will need to focus on delivering solutions that combine experience and execution with hyperscale providers’ offerings.”
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