Cloud spending increases 42% in first quarter, but growth rate slows just a tad: report

Amazon maintains its commanding market lead among cloud service providers, but overall growth is down a bit in the first quarter. (Pixabay)

With most of the large cloud providers' first quarter earnings reports in the books, it's clear that the sector's growth rate has moderated just a tad, according to a report.

Synergy Research Group said first quarter spending on cloud infrastructure services increased by 42% from the same quarter a year ago, but the growth rate was slightly lower than what the cloud providers posted last year. While a year-over-year growth rate of 42% would be the envy of most telecoms sectors, the cloud providers have reached such massive scale that this evidence of  somewhat slower growth was expected at some point.

“This is another impressive growth quarter for the cloud market. The decline in growth rate should not be viewed as a weakening market, but as an inevitable consequence of a market that has now reached massive scale. For the eighth consecutive quarter the market size has increased by well over a billion dollars over the previous quarter,” said John Dinsdale, a chief analyst at Synergy Research Group, in a prepared statement.

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RELATED: Amazon Web Services tops banner year for cloud providers

As it has done over the past eight quarters, Amazon once again grew faster than the overall market in the first quarter. In order of ranking behind Amazon Web Services, Microsoft, Google, Alibaba and Tencent saw their revenues jump 70% or more year over year, according to Synergy Research Group.

Following the top five cloud providers, IBM, Salesforce, Oracle and Rackspace have substantial market share, but typically have lower growth rates.

“As the market goes from strength to strength the pack of cloud providers that are chasing Amazon has bifurcated into high-growth challengers and lower growth niche-oriented providers," Dinsdale said. "But Amazon retains its strong leadership position and continues to control a third of the worldwide market.” 

Synergy estimated that first quarter cloud infrastructure service revenues, which included infrastructure-as-a-service (IaaS), Platform-as-a-service (PaaS) and hosted private cloud services, topped $21 billion, with revenues for the last four quarters reaching more than $75 billion.

Public IaaS and PaaS services accounted for most of the market and grew by 48% in the first quarter. In public cloud, the dominance of the top five cloud providers was even more pronounced as they control over three quarters of the market. Overall, the cloud market continued to grow strongly in all regions of the world during the first quarter.

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