Public cloud services market to hit $214bn

The worldwide public cloud services market is projected to grow by 17.5 percent in 2019.
8 April 2019 | 767 Shares

CEO VMware Pat Gelsinger. Source: AFP

The worldwide public cloud services market is set for a major uptick this year, according to a new report by Gartner.

Latest estimates point to a growth of 17.5 percent in 2019 that will be a total of US$214.3 billion, up from US$182.4 billion in 2018.

The fastest growing market segment will be cloud system infrastructure services, or infrastructure as a service (IaaS), which is forecast to grow 27.5 percent in 2019 to reach US$38.9 billion, up from US$30.5 billion in 2018.

The second-highest growth rate of 21.8 percent will be achieved by cloud application infrastructure services, or platform as a service (PaaS).

“Cloud services are definitely shaking up the industry,” said Sid Nag, research vice president at Gartner.

“At Gartner, we know of no vendor or service provider today whose business model offerings and revenue growth are not influenced by the increasing adoption of cloud-first strategies in organizations.”

Nag said that this is only the beginning, and through 2022, the research and consultancy group projects the market size and growth of the cloud services industry at nearly three times the growth of overall IT services.

Worldwide Public Cloud Service Revenue Forecast (Billions of US Dollars)

2018 2019 2020 2021 2022
Cloud Business Process Services (BPaaS) 45.8 49.3 53.1 57.0 61.1
Cloud Application Infrastructure Services (PaaS) 15.6 19.0 23.0 27.5 31.8
Cloud Application Services (SaaS) 80.0 94.8 110.5 126.7 143.7
Cloud Management and Security Services 10.5 12.2 14.1 16.0 17.9
Cloud System Infrastructure Services (IaaS) 30.5 38.9 49.1 61.9 76.6
Total Market 182.4 214.3 249.8 289.1 331.2
BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service Note: Totals may not add up due to rounding. Source: Gartner (April 2019)

According to recent Gartner surveys, more than a third of organizations see cloud investments as a top three investing priority, which is impacting market offerings.

Gartner expects that by the end of 2019, more than 30 percent of technology providers’ new software investments will shift from cloud-first to cloud-only.

This means that license-based software consumption will further plummet, while SaaS and subscription-based cloud consumption models continue their rise.

More than US$1.3 trillion in IT spending will be directly or indirectly affected by the shift to cloud by 2022.

“Organizations need cloud-related services to get onboarded onto public clouds and to transform their operations as they adopt public cloud services,” said Nag.

Currently, almost 19 percent of cloud budgets are spent on cloud-related services, such as cloud consulting, implementation, migration and managed services, and Gartner expects that this rate will increase to 28 percent by 2022.

“As cloud continues to become mainstream within most organizations, technology product managers for cloud-related service offerings will need to focus on delivering solutions that combine experience and execution with hyperscale providers’ offerings,” said Nag.

“This complementary approach will drive both transformation and optimization of an organization’s infrastructure and operations.”

By 2022, almost one-half of the addressable revenue will be in system infrastructure and infrastructure software, according to the firm.

System infrastructure will be the market segment that will shift the fastest between now and 2022 as current assets reach renewal status.

This due to prior investments in data center hardware, virtualization and data center operating system software and IT services, which are often considered costly and inflexible.