Public cloud revenue will reach $500 billion in 2023: The key factors driving it
The pace of cloud computing adoption will accelerate as more organizations explore hybrid IT strategies. CIOs and CTOs will fine-tune the mix of on-premises and managed cloud services for their user's varied applications and workloads.
Worldwide spending on public cloud services and infrastructure will more than double over the 2019-2023 forecast period, according to the latest market study by International Data Corporation (IDC).
With a five-year compound annual growth rate (CAGR) of 22.3 percent, public cloud spending is forecast to grow from $229 billion in 2019 to reach nearly $500 billion in 2023.
Public cloud service market development
"Adoption of public (shared) cloud services continues to grow rapidly as enterprises, especially in professional services, telecommunications, and retail, continue to shift from traditional application software to software as a service (SaaS) and from traditional infrastructure to infrastructure as a service (IaaS) to empower customer experience and operational-led digital transformation initiatives," said Eileen Smith, program director at IDC.
SaaS will remain the largest category of cloud computing, capturing more than half of all public cloud spending in throughout the forecast period. SaaS spending, which is comprised of applications and system infrastructure software (SIS), will be dominated by applications purchases.
The leading SaaS applications will be customer relationship management (CRM) and enterprise resource management (ERM). SIS spending will be led by purchases of security software and system and service management software.
Infrastructure as a service (IaaS) will be the second largest category of public cloud spending. IaaS spending, comprised of servers and storage devices, will also be the fastest growing category of cloud spending with a five-year CAGR of 32 percent.
Platform as a service (PaaS) spending will grow nearly as fast (29.9 percent CAGR) led by purchases of data management software, application platforms, and integration and orchestration middleware.
Three industries - professional services, discrete manufacturing, and banking - will account for more than one-third of all public cloud services spending throughout the forecast period. While SaaS will be the leading category of investment for all industries, IaaS will see its share of spending increase significantly for industries that are building data and compute-intensive services.
For example, IaaS spending will represent more than 40 percent of public cloud services spending by the professional services industry in 2023 compared to less than 30 percent for most other industries. Professional services will also see the fastest growth in public cloud spending with a five-year CAGR of 25.6 percent.
On a geographic basis, the United States will remain the largest public cloud services market, accounting for more than half the worldwide total through 2023. Western Europe will be the second largest market with nearly 20 percent of the worldwide total.
China will experience the fastest growth in public cloud services spending over the five-year forecast period with a 49.1 percent CAGR. Latin America will also deliver strong public cloud spending growth with a 38.3 percent CAGR.
Outlook for cloud service applications growth
Very large businesses will account for more than half of all public cloud spending throughout the forecast period, while medium-sized businesses will deliver around 16 percent of the worldwide total.
Small businesses will trail large businesses by a few percentage points while the spending share from small offices will be in the low single digits.
Moreover, all the company size categories - except for very large businesses - will experience spending growth greater than the overall market.
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