Skip to main content

Public Cloud Service Revenue will Reach $141B in 2019

The overall public cloud computing service provider market will likely experience a period of ongoing consolidation in 2016, as more vendors choose to exit the sector. Others will continue to develop their existing market niche and thereby focus more on meaningful value-added options, rather than the lowest price.

According to the latest market study by International Data Corporation (IDC), worldwide spending on public cloud services will grow at a 19.4 percent compound annual growth rate (CAGR) -- that's about six times the overall IT spending growth -- from nearly $70 billion in 2015 to more than $141 billion in 2019.

IDC Public Cloud Services Forecast

Software as a Service (SaaS) will remain the dominant cloud computing method, capturing more than two thirds of all public cloud spending. That being said, global spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at a faster rate than SaaS -- with five-year CAGRs of 27 percent and 30.6 percent, respectively.

"Over the past several years, the software industry has been shifting to a cloud-first (SaaS) development and deployment model. By 2018, most software vendors will have fully shifted to a SaaS/PaaS code base," said Frank Gens, senior vice president at IDC.

IDC believes that this means many enterprise software customers, as part of their next major software upgrade assessment, will seriously consider a SaaS solution. Put together, new cloud-first solutions and traditional software apps migrating to the cloud will drive more CIOs and their company data to the cloud.

Large enterprise will continue to be the primary adopter of public cloud, with combined spending of more than $80 billion in 2019. However, SMBs will also contribute to cloud spending, with more than 40 percent of the worldwide total for public cloud. Moreover, IDC says that growth will likely come from companies with fewer than 500 employees.

Public Cloud Market Development Trends

To date, the industries with the largest public cloud services expenditures were discrete manufacturing at $8.6 billion, followed by banking and professional services at $6.8 billion and $6.6 billion, respectively.

By 2019, IDC predicts that professional services will move ahead of banking into the number two position worldwide. These three industries were also the public cloud services spending leaders in the Americas and in Europe, Middle East, and Africa (EMEA) during 2015.

However, telecommunications was the second largest industry in the Asia-Pacific region and is forecast to move into the top industry position by 2019. The telecom sector will be the fastest-growing vertical industry over the 2014-2019 forecast period, with a worldwide CAGR of 22.2 percent.

According to the latest IDC assessment, leading industries such as media, state and local government, education, retail and transportation will also experience five-year CAGRs that are greater than 20 percent.

"Cloud services will remain the essential foundation of the IT industry's 3rd Platform of innovation and growth. As the cloud market enters an innovation stage, there will be an explosion of new solutions and value creation on top of the cloud," said Eileen Smith, program director at IDC.

Industry-specific applications will gain momentum as CIOs look for solutions that can be configured to their unique business and vertical industry requirements. Furthermore, organizations across all industries will eventually shift toward cloud-first strategies -- to enable their bold digital business transformation initiatives.

Popular posts from this blog

How Data and Analytics Drive Business Growth

Senior executives in the world’s largest and most complex organizations will develop the insights required to achieve lasting Digital Transformation. Gartner has identified a model for digital business growth that binds together data, analytics, technology, and forward-looking transformation capabilities. The Gartner Research Board said that data and analytics (D&A) leaders are uniquely positioned to drive this strategic organizational change that will make their companies behave like 'digital native' leaders.  "The most advanced and successful D&A leaders are driving new opportunities to use digital capabilities – often data and analytics products – to capture value. Those opportunities should directly connect to the business priorities," said Mario Faria, vice president at Gartner . Digital Business Market Development At the same time, some leaders are using digital and D&A to create whole new business models. These leaders – which Gartner named the CxO

Anywhere, Anytime Workplace Demand for SASE

The ongoing adoption of flexible working models within the enterprise market has significant implications for typical IT organizations that must now support knowledge workers and front-line employees that operate outside the corporate network perimeter. The global COVID-19 pandemic created IT networking and security challenges. The expansion of the distributed workforce, an increasing reliance on cloud computing infrastructure, and the requirement to securely connect online employees -- wherever they choose to work, at any given moment in time. Legacy IT solutions that have rigid network underlays and a requirement for on-premises infrastructure cannot adequately deal with these trends. This 'Anywhere, Anytime Workplace' led to demand for new Secure Access Service Edge (SASE) solutions, with networking and security delivered as-a-service. Anywhere, Anytime Workplace Market Development   Although converging networking and security capabilities offer enterprises a promising solut

The Metaverse Raised Virtual Reality Interest

After years of slow growth and limited use cases, the Virtual Reality (VR) market is now forecast to grow significantly over the next five years. Consumer interest in VR games and media continues to grow after the COVID-19 pandemic accelerated activity. At the same time, the need for employee enablement and immersive content within the enterprise environment remains strong. According to the latest market study by ABI Research, over 90 million Head Mounted Display (HMD) shipments in 2027 will drive total VR market revenues to reach over $95 billion across hardware, software, and services. Virtual Reality Market Development "The virtual reality market is no stranger to false starts, with identifiable efforts in VR dating back to the 1980s and 1990s. While the technology never found purchase results, the increased capability of VR hardware combined with the demand for immersive content in numerous markets, presents a significant opportunity," says Eric Abbruzzese, research direc