According to the Worldwide Semiannual Public Cloud Services Tracker from IDC, the global market for public cloud services – which includes Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service – grew by 29.0 percent over the previous year in 2021 and brought in $408.6 billion in revenue.
The top five public cloud service providers – Microsoft, AWS, Salesforce, Google, and SAP-collected about 40 percent of global revenue in 2021, expanding 36.6 percent annually as spending continued to centralize. Microsoft took the top spot in the entire public cloud services market in 2021 with 14.4 percent share, closely followed by AWS with 13.7 percent share. Microsoft had solutions in all four deployment categories.
“Organizations continued their strong adoption of shared public cloud services in 2021 to align IT investments more closely with business outcomes and ensure rapid access to the innovations required to be a digital-first business,” said Rick Villars, Group Vice President, Worldwide Research at IDC. “For the next several years, leading cloud providers will play a critical role in helping enterprises navigate the current storms of disruption (inflation, supply chain, and geopolitical tensions), but IT teams will also focus more on bringing greater financial accountability to the variable spend models of public cloud services.”
Although the market for public cloud services as a whole expanded by 29.0 percent in 2021, the foundational cloud services that underpin digital-first strategies witnessed a 38.5 percent increase in revenue. This would underline the growing reliance of businesses on a cloud innovation platform based around widely used compute, data, and AI services, as well as app framework services.
IDC anticipates that as businesses use cloud to combat current challenges and hasten their transition to a digital business model, spending on core cloud services (particularly IaaS and PaaS components) will continue to increase at a faster rate than the overall cloud market.
“The last few years have demonstrated that in challenging times, businesses increasingly rely on cloud services to modernize their operations and deliver more value to customers,” said Dave McCarthy, Research Vice President, Cloud and Edge Infrastructure Services, IDC. “This trend is expected to continue as public cloud providers offer more ways of extending cloud services to on-premises datacenters and edge locations. These expanded deployment options reduce many barriers to migration and will facilitate the next wave of cloud adoption.”
“In the digital-first world, enterprises that are serious about competing for the long term use the lens of business outcomes to evaluate strategic technology decisions, which fuels the fast-growing ecosystem seen in the public cloud market,” said Lara Greden, Research Director, Platform as a Service, IDC. “Cloud service providers showed relentless drive to enhance the productivity of developers and overall speed of application delivery, including emphasis on containers-first and serverless-first approaches.”
“SaaS applications remain the largest and most mature segment of public cloud, with 2021 revenues that have now reached $177 billion. The tailwinds of the pandemic continued to fuel expedited upgrades and replacements of older systems in 2021, though company goals haven’t changed,” said Eric Newmark, Group Vice President and General Manager of IDC’s SaaS, Enterprise Software, and Worldwide Services division. “Companies seek applications that will help increase enterprise intelligence, improve operational efficiency, and drive better decision making. Ease of use, ease of implementation and integration, streamlined workflows, data and analytical accessibility, and time to value are the key criteria driving purchasing decisions, though verticalization has also steadily increased as a key priority.”
Although a small number of corporations dominate the markets for basic cloud services and SaaS-based applications, there is still a significant long tail of businesses providing cloud services globally. These market leaders provide focused PaaS services for specific use cases or cross-cloud compute, data, or network governance services, which together account for roughly three-quarters of the market’s sales in the foundational cloud services sector. In the SaaS-Applications industry, where consumers are increasingly focusing on specific results, the long tail is more prominent and over two thirds of spending is accounted for outside the top 5.