The shift of IT workloads to hybrid cloud computing continues to grow, fueled in part by the rise of digital transformation projects. Worldwide spending on public cloud services and infrastructure is forecast to reach $266 billion in 2021, according to the latest market study by International Data Corporation (IDC).
Although spending growth will likely slow during 2016-2021, the market is still expected to achieve a five-year compound annual growth rate (CAGR) of 21 percent. Moreover, public cloud services spending will reach $128 billion in 2017 -- that's an increase of 25.4 percent over 2016.
Public Cloud Market Development
The United States will be the largest market for public cloud services accounting for more than 60 percent of worldwide revenues throughout the forecast, and total spending of $163 billion in 2021.
Western Europe and Asia-Pacific excluding Japan (APeJ) will be the second and third largest regions with 2021 spending levels of $52 billion and $25 billion, respectively. APeJ and Latin America will experience the fastest spending growth over the forecast period with CAGRs of 26.7 percent and 26.2 percent, respectively.
However, according to the IDC assessment, six of the eight regions are forecast to experience CAGRs greater than 20 percent over the next five years.
"In Western Europe, the public cloud market is going to more than double in the 2016-2021 time frame led by strong spending growth in Germany, which is also the largest national market, Italy, and Sweden," said Angela Vacca, senior research manager at IDC.
The U.S. industries that will see the fastest growth in public cloud services spending are professional services (21.5 percent CAGR), media (21 percent CAGR), retail, and telecom (each with a CAGR of 20.9 percent).
The U.S. industries that will spend the most on public cloud services are discrete manufacturing, professional services, and banking. Together, these three industries will account for nearly one third of all public cloud services spending in the United States in 2021.
In Asia-Pacific excluding Japan, banking, professional services, and telecom will deliver more than a third of the region's public cloud services spending in 2021 while the industries with the fastest spending growth will be professional services, personal and consumer services, and process manufacturing.
Software as a Service (SaaS) will remain the dominant cloud computing type, capturing two thirds of all public cloud spending in 2017 and nearly 60 percent in 2021. Spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at much faster rates than SaaS with five-year CAGRs of 30 percent and 29.7 percent, respectively.
Outlook for Enterprise Adoption Growth
In terms of company size, more than half of all public cloud spending will come from very large businesses (those with more than 1,000 employees) while medium-sized businesses (100-499 employees) will deliver about 20 percent of spending throughout the forecast.
Large businesses (500-999 employees) will see the fastest growth with a five-year CAGR of 22.8 percent. While purchase priorities vary somewhat depending on company size, the leading product categories include CRM and ERM applications in addition to server and storage hardware.