The infrastructure-as-a-service market is rapidly growing and now viewed as vital to business success. In fact, the worldwide IaaS public cloud services market grew 31.3% in 2018 to total $32.4 billion, according to Gartner. This is up from $24.7 billion in 2017.
Amazon was once again the number one vendor in the IaaS market in 2018, followed by Microsoft, Alibaba, Google and IBM.
“Despite strong growth across the board, the cloud market’s consolidation favours 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 IaaS business. Only those providers who invest capital expenditure in building out data centres 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.”
AWS and Microsoft Azure will dominate 90% of the IaaS market – Gartner
IaaS public cloud dominance
In 2018, the top five IaaS providers accounted for nearly 77% of the global IaaS market, up from less than 73% in 2017.
According to Gartner, IaaS market consolidation will continue through 2019, driven by the high rate of growth for the top providers, which experienced aggregate growth of 39% from 2017 to 2018 compared with the more modest growth of 11% for all other providers during the same period.
“Consolidation will occur as organisations and developers look for standardised, broadly supported platforms for developing and hosting cloud applications,” said Nag.
Amazon continued to lead the worldwide IaaS market with an estimated $15.5 billion of revenue in 2018, up 27% from 2017 (see Table 1).
The largest of the IaaS providers, Amazon accounts for nearly half of the total IaaS market — it continues to aggressively expand into new IT markets via new services, as well as acquisitions, growing its core cloud business
Microsoft were positioned second in the IaaS market, with revenue surpassing $5 billion in 2018, up from $3.1 billion in 2017 — this is delivered through its innovative and open Microsoft Azure offering, which continues to solidify its position as a leading IaaS provider.
The top 10 infrastructure and operations trends for 2019, according to Gartner
The dominant IaaS provider in China, Alibaba Cloud, experienced the strongest growth among the leading vendors, growing 92.6% in 2018. Gartner said that the company has built an ecosystem consisting of managed service providers (MSPs) and independent software vendors (ISVs). Its success last year was driven by aggressive R&D investment in its portfolio of offerings, especially compared with its hyperscale provider counterparts. Alibaba has the financial capability to continue this trend and invest in global expansion.
Google came in fourth 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 Nag.
“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 programmes in order to drive revenue,” he said.
