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Cloud IaaS Service Revenue will Reach $43.6 Billion

Cloud computing services have experienced consistent growth over the last decade. Savvy IT vendors that transformed their portfolio have reaped the benefits of their strategic foresight. Others are still reacting to the diminished demand for their legacy product offerings.

Many CIOs now consider public cloud infrastructure as a service (IaaS) as a viable alternative to their on-premises IT infrastructure. A recent survey of over 6,000 IT organizations found that nearly two thirds of the respondents are either already using or planning to use public cloud IaaS by the end of 2016.

According to their latest worldwide market study, International Data Corporation (IDC) forecasts public cloud IaaS revenues to more than triple from $12.6 billion in 2015 to $43.6 billion in 2020 -- with a compound annual growth rate (CAGR) of 28.2 percent over the five-year forecast period.

Public IaaS Market Development Trends

"Public cloud services are increasingly being seen as an enabler of business agility and speed," said Deepak Mohan, research director at IDC. "This is bringing about a shift in IT infrastructure spending, with implications for the incumbent leaders in enterprise infrastructure technologies."

IDC believes growth of public cloud IaaS has also created new service opportunities around adoption and usage of public cloud resources. That being said, with changes at the infrastructure, architectural, and operational layers, public cloud IaaS is slowly transforming the enterprise IT value chain.

The public cloud IaaS market grew 51 percent in 2015. IDC expects this high growth to continue through 2016 and 2017 with a CAGR of more than 41 percent. However, the growth rate is expected to slow after 2017 as enterprises shift from cloud exploration to cloud optimization.

Furthermore, alternatives such as managed private cloud will grow in maturity and availability, providing IT organizations with more options as they plan their infrastructure evolution to support digital transformation projects.

Demand for Hybrid Cloud Infrastructure

Large enterprise leaders seek a flexible and adaptive business technology environment, therefore hybrid solutions that mix their existing on-premises IT infrastructure with public cloud infrastructure represents the optimal configuration.

In fact, hybrid cloud infrastructure adoption is already a common practice at many large enterprises across the globe, and IDC now predicts that 80 percent of IT organizations will be committed to embrace hybrid architectures by 2018.

Moreover, the dominance of the leading cloud service providers is expected to continue throughout the forecast period, as economies of scale and continued investment drive the cycle of adoption and growth.

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