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Cloud services market on a bull run; Amazon, Microsoft, Google lead

Sohini Mitter
13th Apr 2018
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AWS, Google and Microsoft are estimated to account for more than three-fourths of all cloud platform revenues in 2018.

A Morgan Stanley forecast last month indicated that Microsoft is racing towards the $1 trillion valuation-mark riding on phenomenal growth in its public cloud services. The resurgence of Microsoft’s cloud division actually mirrors the bull run in the infrastructure-as-a-service (IaaS) market right now.

IaaS is growing at 36 percent, states Gartner in a new report. It is outgrowing the overall public cloud market that is estimated to reach $186.4 billion in revenues in 2018, registering a growth of 21.4 percent from a year ago. The top ten public cloud providers will occupy about 70 percent of the IaaS market by 2021, rising from 50 percent in 2016.

Essentially, the powerful are gaining in power.

In a separate report, Forrester estimates that Amazon Web Services, Google, and Microsoft will capture 76 percent of all cloud platform revenues in 2018, and expand to 80 percent by 2020. Other prominent players in cloud are Salesforce, Oracle, IBM, Cisco, etc. Analysts say more than half of global enterprises will rely on “at least one public cloud platform” to drive digital transformation.

According to Forrester, organisations are no longer questioning whether cloud is right for their business or not. They are now trying to figure out “how soon and how much”.

SaaS leads cloud market

Segment-wise, software-as-a-service (SaaS) will continue to be the largest with revenues increasing 22.2 percent to $73.6 billion in 2018. By 2021, it will account for nearly 45 percent of total application software spending with revenues crossing $117 billion, according to Gartner.

Sid Nag, Research Director at Gartner, said:

“In many areas, SaaS has become the preferred delivery model. Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes.”

Microsoft, Oracle, and Salesforce together have a 70 percent share of all SaaS salesforce automation and customer service subscription revenues, states Forrester.

There is an increased demand for application customisation, combined with emerging digital technologies such as IoT and AI.

Cloud providers, thus, are investing more in diversifying their offerings. Microsoft CFO Amy Hood said in the last earnings call, “Our unique ability to provide a distributed hybrid model for the intelligent cloud and intelligent edge continues to attract customers to Microsoft.”

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