The worldwide public cloud market grew 31.3% in 2018 to total $32.4 billion, up from $24.7 billion in 2017, according to Gartner. AWS was once again the No. 1 vendor in the public cloud market in 2018, followed by Microsoft Azure, Alibaba, Google Cloud and IBM.
In 2018, the top five public cloud providers accounted for nearly 77% of the global public cloud market, up from less than 73% in 2017.
“Despite strong growth across the board, the cloud market’s consolidation favors the large and dominant providers, with smaller and niche providers losing share,” said Sid Nag, Research Vice President at Gartner. “This is an indication that scalability matters when it comes to the public cloud business. Only those providers who invest capital expenditure in building out data centers at scale across multiple regions will succeed and continue to capture market share. Offering rich feature functionality across the cloud technology stack will be the ticket to success, as well.”
Market consolidation will continue through 2019, driven by the high rate of growth for the top public cloud providers, which experienced aggregate growth of 39% from 2017 to 2018 compared with the more modest growth of 11% for all other public cloud providers during the same period. “Consolidation will occur as organizations and developers look for standardized, broadly supported platforms for developing and hosting cloud applications,” added Mr. Nag.
AWS, Azure, GCP, Alibaba
AWS continued to lead the worldwide public cloud market with an estimated $15.5 billion of revenue in 2018, up 27% percent from 2017. The largest of the IaaS providers, AWS accounts for nearly half of the total public cloud market. It continues to aggressively expand into new IT markets via new services, as well as acquisitions, growing its core cloud hosting services business.
Microsoft Azure secured the No. 2 position in the public cloud market with revenue surpassing $5 billion in 2018, up from $3.1 billion in 2017. Microsoft would deliver its public cloud capabilities through its “innovative and open” Microsoft Azure offering, which continues to solidify its position as a leading public cloud provider.
The dominant public cloud provider in China, Alibaba Cloud, experienced the strongest growth among the leading vendors, growing 92.6% in 2018. The company has built an ecosystem consisting of managed service providers (MSPs) and independent software vendors (ISVs). According to Gartner, its success last year was driven by aggressive R&D investment in its portfolio of offerings, especially compared with its hyperscale provider counterparts. Alibaba would have the financial capability to continue this trend and invest in global expansion.
Google came in at the No. 4 spot, growing 60.2% in revenue from 2017. “Google’s cloud offering is something to keep an eye on with its new leadership focus on customers and shift toward becoming a more enterprise-geared offering,” added Mr. Nag, he continues: “As the cloud business continues to gather momentum and hyperscale cloud providers consolidate the market, product managers at cloud MSPs must look at other ways to differentiate, such as focusing on vertical industries and getting certified in the hyperscale cloud provider partner programs in order to drive revenue.