‘What are you doing about the cloud?’ has been a constant question for suppliers, channels and users in recent years, especially since the Credit Crunch of 2008-9. Since then everyone’s done an awful lot about it as you can see from my development and forecast Figure above; in fact cloud computing has been such a massive success that I’ve argued elsewhere that we don’t need it as a term to differentiate it from other ‘traditional’ styles of computing. In any case I thought I’d share my latest findings and outlook with those of you who find it a useful way of measurement. As always the stats published here come from the continuous quarterly research I carry out – and there’s much more at a regional and country basis to help you plan your business levels if you’d like to contact me.
As you can see there has been very rapid growth since the inception of the market around 2005. While PaaS is about building your applications and IaaS about running them in someone else’s data center, SaaS is about running someone else’s application from their location…. in all cases on a pay-as-you-go basis. The widening gap between PaaS and IaaS shows the extent to which we are moving from a development to production environment for cloud adopters, while the widening gap between both of those and SaaS the extent to which many users prefer to stream their supplier apps into their organisations without having to bother about buying hardware, software and service themselves. There’s an on-going shift from buying perpetual software licences to time-limited subscriptions, to SaaS. My forecast is that the differences in growth and size for the 3 cloud service types will continue in the period up to 2020, by which time the total will be worth $173b.
On a regional basis (see Figure) adoption has been strongest in the Americas (driven by the US of course), which accounted for 50% of spending in 2016 compared with 20% in Asia/Pacific and 30% in EMEA. International (non-US) cloud adoption has been enhanced by the build out of data centers by the big players (Amazon, Microsoft, Google, IBM, Rackspace, NTT, etc.) over the last few years.
The increasing sophistication of cloud services and the continued use of US-based data centers for international customers who aren’t impelled to keep their data within their own country or region will enable the Americas to continue as the largest region, although there will be a shift in the balance of regional spending to 47:22:31 between the Americas, Asia/Pacific and EMEA in 2020. In this respect the cloud services are similar to the server market where the Americas accounted for 35% of 2016 spending rather than the peripherals market where Asia/Pacific spent most of the 3 big world regions.
2016 global market shares for cloud services in total and by type are shown in the Figure opposite. Of the total SaaS accounted for 58% and is still led by Salesforce.com, which had a 9.7% share. Its long term success in this sub-market has been marred somewhat by consistently thin (and often negative) net profits. Amazon and IBM were joint leaders of the IaaS market with market shares of 23.0% and 20.7% respectively. Of the other top suppliers, 2 telecoms suppliers AT&T and NTT held shares of 5.1% and 4.4% respectively, while public cloud vendors Google (6.3%), Microsoft (3.9%) and Apple (2.5%) took places 3, 6 and 8. Systems suppliers Fujitsu (3.9%) and Dell/EMC (2.7%) were in 6th and 8th respectively. IBM led the PaaS market, where its BlueMix and other offerings gave it a 28.0% share of this $18.3b market in 2016.
I expect that most systems vendors will make further investments in cloud data centers from which to supply cloud services during 2017 and beyond. In the past both HPE and Dell held back from driving public cloud business, arguing that they didn’t want to compete for services with their large cloud service provider customers. I expect that to change in 2017, especially at Dell/EMC where it can fill Virtustream (acquired along with EMC) with many more servers.
As a proportion of total IT and Communications spending cloud services have grown from nothing to 2.1% of spending in 2016; I forecast that the market will be worth $176b in 2020, which will be 2.6% of total spending. However there will be a lot of changes in the type of service being offered between now and then… and plenty of scope for new (especially regional) suppliers to challenge the early leaders Amazon, IBM and Salesforce.com for leadership. It’s no longer a question of what you’re going to do with the cloud, but how you’re going to improve your business with it, which involves a major shift in data center investments away from large user organisations towards cloud suppliers.