Led by Amazon Web Services' (AWS) continued market dominance, overall global spending on cloud infrastructure services increased by 51% in the first quarter from the same quarter a year ago, according to Synergy Research Group. Those findings are noteworthy considering telecom operators—and their infrastructure partners—are increasingly investing in data centers and cloud services to move to cheaper, virtualized offerings.
Indeed, according to the report, the "cloud boom" accelerated in the first quarter considering the growth rate in the period comfortably beat the growth rates that were achieved in the previous five quarters.
“Cloud growth in the last two quarters really has been quite exceptional,” said John Dinsdale, a chief analyst and research director at Synergy Research Group, in a release from the firm. “Normal market development cycles and the law of large numbers should result in growth rates that slowly diminish, and that is what we saw in late 2016 and through most of 2017."
"But the growth rate jumped by three percentage points in Q4 and by another five in Q1. That is good news for the leading cloud providers, whose historically high levels of capex are helping to ensure that they are the main beneficiaries of that exceptional market growth,” he added.
AWS' market share has hovered around 33% for the last 12 quarters while the overall market has almost tripled in size. Microsoft, Google and Alibaba are also cashing in on the growth of cloud spending without cutting into AWS' piece of the pie.
AWS is eating into the market share of the small and medium-sized cloud operators that have collectively seen their market shares diminish, according the report. Thanks to its leadership in hosted cloud services, IBM has held its ground at around 8%.
With most of the earnings reports in the books for the major cloud players, Synergy estimated that quarterly cloud revenue—including infrastructure as a service (IaaS), platform as a service (PaaS) and hosted cloud services—have reached close to $15 billion. Public IaaS and PaaS offerings accounted for most of the market and grew by 56% in the most recent first quarter.
The dominance of Amazon in cloud services is underscored by the company's traction in the telecom industry specifically. For example, after Verizon sold its own cloud business, the company in 2017 inked a virtual network services deal with Amazon. And in 2016 Ericsson announced a global alliance with AWS.
Service providers, such as Verizon and AT&T, are tapping into the cloud to offer cloud-based virtual services, including as a service VNFs, IaaS, Paas and virtual customer premise equipment, to their enterprise customers.
And with 5G, mobile operators are in the process of implementing cloud technology from a cloud-native core network architecture through use in their radio access networks.
Mobile operators are also expected to use the models defined for cloud computing by adapting them as needed. In particular, network slicing, which enables mobile operators to offer customized virtual mobile networks to customers, is one example of extending traditional cloud offerings to network-as-a-service offerings.