Worldwide Public Cloud Spending will Reach $107 Billion by 2017

The worldwide spending on public cloud services will reach $47.4 billion in 2013 and is expected to be more than $107 billion in 2017, according to a new forecast from International Data Corporation (IDC). The primary driver for cloud adoption will shift to innovation and ways to improve competitive offerings.

IDC-research-cloudBy 2017, IDC expects public cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.

Cloud Drives Innovation

According to IDC, there are signs that cloud services are starting to shift from improving IT efficiency into a ‘Chapter Two’ phase where the scale of cloud services adoption will not only be much bigger, but also more user and solution driven. In this phase of growth, cloud and the other 3rd Platform technologies – mobile, social, and Big Data – will become even more interdependent as they continue to drive growth and innovation across all industries that depend on IT.

“The first wave of cloud services adoption was focused on improving the efficiency of the IT department,” said Frank Gens, Senior Vice President and Chief Analyst at IDC. “Over the next several years, the primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings. The emergence of cloud as the core for new ‘business as a service’ offerings will accelerate cloud adoption and dramatically raise the cloud model’s strategic value beyond CIOs to CXOs of all types.”

Commoditization of Cloud

An important factor driving growth in public cloud services spending is the expanding variety of cloud deployment options, and growing richness of these options. Besides that, growing commoditization and competition is expected to bring about consolidation in basic cloud services (infrastructure as a service offerings), and will force vendors to expand their offerings toward higher value services. While commoditization is expected to result in lower pricing and tighter profit margins, the competition will greatly expand the addressable market of solutions and customers.