The public cloud services market worldwide generated almost $183 billion in revenue in 2018 and grew 27.4% year-over-year, according to IDC. The firm paints a picture of an industry that is consolidated and continuing to grow, though statistically more slowly than in past years.
The results, which were reported in the firm's "Worldwide Semiannual Public Cloud Services Tracker," showed a growth rate that is more than 4.5 times that of the overall IT industry. That was a bit less than the rate in 2017, which IDC attributes to the growth of the base, which has more than doubled during the past three years.
"Overall, the public cloud services market continues to grow," according to Deepak Mohan, research director within IDC's Enterprise Infrastructure Practice. "While the growth rate shows a marginal decline (owing to its $183 billion size), it is nowhere close to plateauing."
The public cloud services market is a bit top heavy, with five public cloud service providers accounting for 46.3% of spending growth and 35% of all spending in 2018, according to IDC's research. The analyst firm refused to name the "top five public cloud service providers" in its view, perhaps because there are a lot of metrics by which these companies could be measured. But it's generally agreed that the top public clouds are Microsoft Azure, AWS, Google Cloud, IBM and Oracle.
IDC said the overall spending level for public cloud services is 3% higher than in 2017. IDC says that the consolidation continues a trend that is most obvious in the infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) sectors. The top five vendors accounted for 63% of spending in the combined category.
The pecking order in terms of size is software-as-a-service (SaaS), IaaS and PaaS. "Although not exact, this roughly maps to the order in which each of these sub segments emerged and came to maturity in the market," Mohan told FierceTelecom. "While there are variations across regions, from a global perspective this order can be expected to stay for at least the near term of the next two to three years."
Things look good, but there are yellow flags. Mohan wrote that the two main threats are security — "real or perceived" — and regulation. "On the security front, each setback exposes modes of failure which are/were not adequately covered within the existing security/oversight processes at enterprises," states the report. "Regulation follows security concerns and incidents, and tight regulatory requirements on residency, ownership and transit of data can act as barriers to adoption."
Geopolitics also is an issue. Mohan wrote that the "escalation of the trade wars may disrupt the infrastructure supply chain and increase the cost of delivery of public cloud services."
Highlights from the three subcategories:
- SaaS: Software-as-a-Service generated 62.4% of the cloud market revenue. This category includes system infrastructure software and applications such as ERP and human capital management (HCM).
- IaaS: The IaaS market is consolidated in the top five providers, which account for more than 70% of the market. "Market growth picked up in 2018, indicating a tipping point in the adoption of public cloud IaaS [in the] enterprise in a broader manner," according to the report.
- PaaS: The market also is consolidated in the top five but is not as concentrated as the IaaS market. The shortage of developers is a driver for PaaS, according to IDC.