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 a Digital-First CEO Leads Transformation

Some leaders reject the notion that "wait and see" is the best response to disruptive change. Savvy senior executives are already driving digital business transformation throughout their organization in an effort to gain a bold strategic advantage. According to the latest market study by International Data Corp (IDC), Digital-First CEOs plan to drive at least half of their income from digital business products, services, and experiences by 2027 -- that's ahead of the market average of 39 percent. Driven by their response to the COVID-19 pandemic, these business leaders have changed how they think about the relationship between business and technology, and how they approach the next digital transformation era -- from scaling digital technology to guiding a viable digital business. Digital Business Market Development IDC defines digital business as value creation based on technology, which entails: 1) Automated customer-facing processes and internal operations; 2) Provision

Digital Solutions for Industrial & Manufacturing Firms

Executive leaders of fast-moving consumer goods (FMCG) are seeking guidance on how to apply new business technology in their manufacturing operations. CIOs and CTOs are tasked with gaining insight into the best solutions for digital transformation. ABI Research evaluated the impact politics, regulation, the economy, supply chain, ESG, and technology are having on FMCG, pharma, producers of steel, chemicals, pulp and paper -- as well as the mining and oil & gas sectors. Digital Transformation Market Development "Our assessment found that the FMCG sector is under pressure from all sides," says Michael Larner, industrial & manufacturing research director at ABI Research . Securing raw materials is challenging considering lockdowns in China and limited grain supplies from Ukraine. Supply shocks are raising input costs, and operating costs are rising with higher energy costs coupled with the pressure to pay higher wages and work sustainably. "We all hoped that with th

Retail Transformation Gains New Momentum

Forward-thinking retailers now have a bright future. In contrast, those that failed to enhance their business model via digital transformation have struggled, declined, and their assets were eventually liquidated. The key difference between these two business outcomes is applied strategic foresight. Even as the world continues to emerge from a global pandemic, retail is growing at levels not seen in the last two decades. Retail sales grew by 7 percent in 2020 and by over 14 percent in 2021, which is in stark contrast to the 3.7 percent annual growth between 2010 and 2019. The increased demand for retail has put a strain on supply chains and retail operations worldwide. As a result, retailers and stakeholders are turning to automation solutions such as mobile robotics for operational ease. Retail Transformation Market Development According to the latest market study by ABI Research, worldwide commercial robot revenue in retail stores will have a Compounded Annual Growth Rate (CAGR) of o