According to recent Synergy Research Group research, businesses spent more than $57 billion on cloud infrastructure services in Q3. Despite two significant obstacles – the historically strong U.S. currency and a very constrained Chinese market – this was an increase of more than $11 billion from the third quarter of previous year.
This additional spending would reflect a 24% increase over the previous year, according to Synergy Research. The growth rate would have exceeded 30% if recent exchange rates had stayed stable. Google boosted their market share in Q3 compared to the second quarter, but Amazon and Microsoft saw relatively little change, since the market is still on a robust growth trajectory. All three companies have seen at least a 1% growth in market share from a year earlier.
In the most recent quarter, Amazon, Microsoft, and Google collectively held a 66% share of the global market, up from 61% in the previous quarter. The combined sales of all other cloud providers have increased by thrice since late 2017, but as a result of their far slower growth rates than those of the industry leaders, their market share has fallen from 50% to 34%.
IaaS, PaaS
Since the majority of the major cloud service providers have now made their Q3 earnings data public, Synergy Research estimates that revenues for cloud infrastructure services (including IaaS, PaaS, and hosted private cloud services) were $57.5 billion for the quarter, and $217 billion for the prior twelve months. The majority of the market is made up of public IaaS and PaaS services, which increased by 26% in Q3. The top three cloud service providers, who together own 72% of the market, are even more dominant in the public cloud. Geographically, the cloud business is still expanding rapidly across the board.
“It is a strong testament to the benefits of cloud computing that despite two major obstacles to growth the worldwide market still expanded by 24% from last year,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Had exchange rates remained stable and had the Chinese market remained on a more normal path then the growth rate percentage would have been well into the thirties. The three leading cloud providers all report their financials in US dollars so their growth rates are all beaten down by the historic strength of their home currency.”
“Despite that all three have increased their share of a rapidly growing market over the last year, which is a strong testament to their strategies and performance,” added Mr. Dinsdale. “Beyond these three, all other cloud providers in aggregate have been losing around three percentage points of market share per year but are still seeing strong double-digit revenue growth. The key for these companies is to focus on specific portions of the market where they can outperform the big three.”
