Led by Amazon (Nasdaq: AMZN) and Rackspace, cloud-based services, including Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), grew 65 percent to $2.75 billion in the first half of 2012, reports Synergy Research Group.
Synergy's report is in line with similar findings made by Gartner in September. Gartner found that what has helped Amazon Web Services gain more of the IaaS market was that it expanded its IaaS offerings and improved its quality of service.
Since the end of 2010, the IaaS and PaaS share of the infrastructure market has grown from 6 percent to 12 percent due to a rise in managed hosting, colocation, and CDN/ADN services.
As more of the managed hosting services market moves towards cloud-based offerings, Synergy said that IaaS holds great potential for growth.
Amazon continues to be the dominant player in the worldwide IaaS market, with a 34 percent share, yet it trails Salesforce.com in the PaaS segment, which makes up 21 percent of the worldwide market.
Meanwhile, the managed hosting and colocation segment continues to be led by Rackspace.
Outside of Rackspace, the market consists of what Synergy calls a "chasing group" of traditional telcos and IT service providers, including Verizon (NYSE: VZ), NTT (NYSE: NTT), British Telecom (NYSE: BT), IBM, France Telecom-Orange, SingTel and China Telecom, which all have no more than a 5 percent market share.
While Equinix (Nasdaq: EQIX) remains the dominant colocation player with an 11 percent market share, it also faces an equal array of telcos, IT service providers and colocation specialists. In the CDN/ADN market segment, Akamai and Level 3 (NYSE: LVLT) were the two dominant players, making up 44 percent of the overall market.
"Amazon has clearly demonstrated first mover advantage and built a strong cloud provider position, driving the IaaS market and lighting a fire under traditional telcos which are seeking to play catch up, often via M&A and partnership activity," Jeremy Duke, Synergy Research Group's founder and Chief Analyst, in a release about the report.
Duke's thesis is being driven by a number of the major traditional telcos.
Looking to offset ongoing losses on their traditional wireline voice side, a growing list of service providers--particularly Verizon, CenturyLink (NYSE: CTL), TDS (NYSE: TDS), and Windstream (Nasdaq: WIN)--have been expanding their own cloud service sets through acquisitions of other cloud and colocation players.
The two largest deals to take place in the past two years were Verizon's acquisition of Terremark and CenturyLink's acquisition of Savvis, both of which are run as subsidiaries of the larger companies. Meanwhile, TDS has been building up an arsenal of its own cloud and managed services program through the development of its Hosted and Managed Services (HMS), a unit that oversees three dominant brands: OneNeck IT Services Corp., Vital Support Systems, and VISI Incorporated.
- see the release
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