Cloud services grow 20% in 2015 to reach $107B

Having had a look at client devices last week it’s time to focus on enterprise IT. I’m waiting for HP Enterprise to report its results today before looking at the hardware markets. Today’s subject is cloud services. I’m sure you’ll want to learn more about how things are developing. The Figure shows the annual revenues of all vendors in the three sub-markets: Infrastructure (IaaS), Platform (PaaS) and Software (SaaS) as a Service. In 2015 the market was worth $109B – 22% up on 2014. In the fourth quarter the market grew 28% to $31B. There was strong growth in IaaS (45%) and PaaS (40%), but less so in the SaaS market (11%).
Cloud services are split between services (IaaS and PaaS) and software categories. The Figure shows market shares for each and in total.
IBM was the leader of the overall market with an 8.4% share in 2015: it has based its strategy on Cloud by investing in SoftLayer and offloading hardware businesses (System x and its chip making Technology group). Amazon (6.5%) was in second – an impressive performance given its role as n Internet retailer: in particular its AWS services has been adopted by many newer businesses as a platform from which to deliver Web-based apps. Microsoft was in third place with a 6.0% share – it has moved strongly into the cloud area with its Azure services. Salesforce.com – still in first position in the SaaS market – was fourth in the overall market with a 5.6% share: despite its success it struggles to make a profit.

The adoption of Cloud services by business customers indicates a shift from building, provisioning and running their own data centers. Nevertheless there are still many technical, business, security and privacy challenges in moving across. In general younger, smaller companies are adopting cloud services more readily than older, larger ones.

My forecast is for growth to $196B in 2020. Despite its poor performance in Q4, SaaS should grow from 48% to 59% of the cloud services market by then.