The Smearing Of Infrastructure And Platform Clouds
October 5, 2020 Timothy Prickett Morgan
The largest public clouds on the planet are also among the most secretive and influential companies in the IT sector, and therefore despite events that go one for days or, now in the time of coronavirus, for weeks on end, we get very little actual information out of them about specifically what is going on in the cloud market with any amount of specificity.
Yes, everybody and anybody who is an incumbent in the IT sector talks about how their “cloud” business is doing, and at least one of the big IT market researchers is sort of throwing up its hands in trying to delineate the revenues from the different types of cloud services that the big providers deliver. It takes a long time to get numbers that make sense, and the Super 8 are not exactly cooperative in vetting the numbers. We are talking about Gartner, of course, who said in a recent report that cased the sales of infrastructure as a service (IaaS) clouds in 2018 and 2019 – yes, there is that kind of lag in the data – that it would be combining IaaS revenues and platform as a service (PaaS) revenues going forward into a single category called cloud infrastructure and platform services, or CIPS for short.
Gartner reckons that this overall category grew by 43.2 percent in 2019, reaching $63.4 billion worldwide against sales of $44.6 billion. The IaaS segment, which Gartner was teasing about in its press release and what caught our attention initially, rose by 37.3 percent, from $32.4 billion in 2018 to $44.5 billion in 2019. There is a certain logic to what Gartner is doing, since the platform service usually includes the underlying infrastructure, but there is also a value in knowing what customers are just buying the raw infrastructure.
Here is the breakdown by vendor for 2019 and 2018, where the top five players account for roughly four-fifths of the revenues worldwide for IaaS:
Obviously, Amazon Web Services has the largest part of the IaaS market on the public clouds, with a stunning 45 percent market share in 2019 with just a tad under $20 billion in revenues and 29 percent growth. AWS is starting to hit the limit of large numbers and the limit of market share effects, and because its growth is slower than the IaaS market, AWS actually lost market share even though it grew at a rate that a server maker envies. Microsoft and Alibaba grew roughly twice as fast in IaaS, and Microsoft was approaching half the size of AWS in IaaS and will probably be able to break through $12 billion in 2020 if all trends persist, getting closer and closer to AWS. Alibaba owns a dominant position in cloud in China, and there is no reason to expect that it cannot grow to rival AWS in size eventually. Google plays third fiddle to AWS and Microsoft in North America and Europe, but had 80.1 percent growth to reach $2.37 billion in sales in 2019, and if growth persists it should break $4 billion in sales in 2020 for IaaS. Some things will have to change in the market for Google to ever catch AWS or Microsoft. Tencent is similarly being scrappy and trying to take on Alibaba in the Chinese market, but it has a long way to go with only $1.23 billion in sales in 2019. The rest of the market, which has dozens and dozens of players, grew by 19.3 percent in 2019, to $8.59 billion, and only accounted for just under 20 percent share. This is a volume game, and it will stay that way.
Now, while Gartner says it will be combining IaaS and PaaS revenues into that single category called CIPS going forward, the latest forecasts still break total cloud services into the five categories we all recognize at this point. Take a look:
As you can see, Gartner expects for IaaS to keep growing at a health clip in the next three years, although the growth rate did take a dip at only 13.4 percent expected this tear despite all of the talk to moving to the cloud. The interesting bit for us is that business process as a service, or BPaaS, was larger than IaaS and PaaS individually, Also, if you add the PaaS and IaaS numbers from this forecast, done in July 2020, they are much larger than the revenues cited in the IaaS model that Gartner put out in August that we referred to above. Go figure. We also see that desktop as a service, or DaaS, is still nascent and not expected to be much of a slice of cloud infrastructure, but it is growing fast as a means of supporting remote workers.