Gartner Says Worldwide IaaS Public Cloud Services Market Grew 31 Percent in 2016

Gartner Says Worldwide IaaS Public Cloud Services Market Grew 31 Percent in 2016


SINGAPORE, September 27, 2017 — The worldwide infrastructure as a service (IaaS) public cloud market grew 31 percent in 2016 to total $22.1 billion, up from $16.8 billion in 2015, according to Gartner, Inc.. Amazon was the No. 1 vendor in the IaaS market in 2016, followed by Microsoft and Alibaba.

"The market for cloud services is growing faster than virtually every other IT market today, with much of this growth coming at the expense of the traditional, noncloud offerings," said Sid Nag, research director at Gartner. "The demand for cloud-based IaaS continues on its path of aggressive growth, and the high growth of IaaS is also driving growth in related cloud markets. While platform as a service (PaaS) andsoftware as a service (SaaS) are also exhibiting strong growth, IaaS is expected to show the fastest growth over the next five years."

Within the IaaS market, there is significant above-market growth for the big three hyperscale IaaS cloud providers. While Amazon Web Services dominated the market in 2016, Microsoft Azure gained more momentum, and Google made some gains. Looking forward, Gartner's position is that while competitive pressures increase, Amazon will witness growth erosion in share, as the non-hyperscale providers struggle to provide value through their services, while other IaaS market leaders will see an increase in growth.

Amazon is the clear leader in the IaaS market with 44.2 percent of the market (see Table 1). Amazon has achieved this position by serving the most customers across the broadest range of use cases — from cloud-native startups, to midmarket businesses wanting to lift and shift traditional applications, to enterprises executing transformational migrations to the cloud.

Table 1. IaaS Public Cloud Services Market Share, 2015-2016 (Millions of U.S. Dollars)


Company
2016
Revenue
2016 Market
Share (%)
2015
Revenue
2015 Market Share (%)
2016-2015 Growth (%)
Amazon
9,775
44.2
6,698
39.8
45.9
Microsoft
1,579
7.1
980
5.8
61.1
Alibaba
675
3.0
298
1.8
126.5
Google
500
2.3
250
1.5
100.0
Rackspace
484
2.2
461
2.7
5.0
Others
9,147
41.2
8,074
48.4
13.2
Total
22,160
100.0
16,861
100.0
31.4

Note: 2015-2016 revenue for Alibaba has been adjusted from estimates previously published in "Market Share: IT Services, 2016"
Source: Gartner (September 2017)

Microsoft secured the No. 2 position in the IaaS market with 7.1 percent market share, an increase of 61.1 percent over 2015. Microsoft solidified its position as a leading IaaS provider through focused investment in the development of IaaS capabilities and in solid sales and marketing execution.

In the third spot, Alibaba's 2016 growth of 127 percent reflects the company's position as the current volume leader and dominant player in the cloud services market in China. Actively expanding its international footprint, it also announced in 2016 the launch of four new data centers located in Europe, Australia, the Middle East and Japan.

"The worldwide public cloud service market growth continues, driven by digital business initiatives, data center consolidations and application migrations to the cloud," said Mr. Nag. "Technology strategic planners must build both relevant offerings and partner-based ecosystems to seize the opportunity."

Gartner clients can learn more at in the report "Market Share Analysis: Public Cloud Services, Worldwide, 2016."

Gartner Global Infrastructure & Operations Events
Gartner analysts will provide additional analysis on cloud trends at the Gartner Global Infrastructure & Operations events November 27-28, 2017 in London, December 4-7, 2017 in Las Vegas and May 15-17, 2018 in Orlando. Follow news and updates from these events on Twitter using #GartnerIO.

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading research and advisory company. The company helps business leaders across all major functions in every industry and enterprise size with the objective insights they need to make the right decisions. Gartner's comprehensive suite of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities. Gartner is headquartered in Stamford, Connecticut, U.S.A., and has more than 13,000 associates serving clients in 11,000 enterprises in 100 countries. For more information, visit www.gartner.com.

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