Public cloud services revenue growth remains strong
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Public cloud services revenue growth remains strong

The worldwide public cloud services market grew 28.6% year over year in the first half of 2017 (1H17) with revenues totaling $63.2 billion, according to new results from the International Data Corporation (IDC) research group.

"Public cloud adoption is accelerating in large part as enterprises recognize that the cloud has become the launchpad for virtually every new IT innovation in the last 24 months – including AI, blockchain, quantum computing and more. Organizations not on the public cloud will be increasingly isolated from the world of tech innovation," said Frank Gens, senior vice president and chief analyst at IDC (www.idc.com).

While stronger than expected growth was seen across all regions, Asia/Pacific saw the highest regional growth at 38.9% and Asia/Pacific now represents 11.5% of all public cloud services revenues. A big part of this was driven by strong public cloud spending in China, which saw 55.6% year-over-year growth in the first half of 2017.

Among the three primary segments of public cloud services (SaaS, PaaS and IaaS), the SaaS segment, which holds 68.7% of overall market share, was the slowest growing segment with a 22.9% year-over-year growth rate.

"Businesses now think 'cloud first' when it comes to their IT strategy and software footprint, since the benefits of cloud are clear and have been broadly demonstrated in most industries," said Eric Newmark, program vice president for IDC's SaaS, Enterprise Applications, and Industry Cloud research practices. "Many companies have picked the low-hanging fruit, in terms of apps that could be easily moved to the cloud, and are now evaluating the migration of their next set of larger strategic systems (i.e. ERP, supply chain applications, etc.) to a SaaS model. These projects, coupled with companies' efforts to embrace digital transformation, will continue to fuel strong SaaS growth.”

The smallest segment was PaaS with a 13.6% of the public cloud services market. However, the PaaS market continues to deliver stronger growth than the other two segments at 50.2% year over year in the first half of 2017.

"The rapid adoption of container technology in the PaaS segment has given developers additional tools to accelerate application development and deployment that is important in the enterprise digital transformation journey," said Larry Carvalho, research manager, PaaS. "All vendors are modifying their solutions to bring automation into the entire application lifecycle, and developers are rewarding such vendors with higher than average gains.”

The IaaS segment represented 17.8% of the public cloud services market in 1H17 and continues to exhibit strong year-over-year growth at 38.1%. Amazon Web Services leads this segment in market share and growth. In addition, the last three years have seen a resurgence of focus on public cloud IaaS by major technology companies. Notable among these are major North American technology players like Microsoft, Google, Oracle, and IBM; as well as Asia/Pacific-based providers such as Fujitsu, Alibaba, and Huawei.

"Growing interest from enterprises and continued investments by service providers has resulted in enhancements in the IaaS segment across multiple dimensions, including the range and granularity of IaaS offerings, value-added services available, and the broader partner ecosystem of services available to enable cloud adoption," said Deepak Mohan, research director, Infrastructure as a Service (IaaS). "Recent introductions into the market, like Azure Stack and VMware Cloud on AWS, also enable easier hybrid IT models and reduce the barrier to cloud adoption for enterprises. Cumulatively, these are paving the way for the next wave of enterprise application deployments on public cloud IaaS."

 

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