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Channel Partners will Drive New Cloud Computing Growth

The worldwide cloud computing infrastructure market had another strong quarter in Q4 2018, as spending grew 46 percent to nearly $23 billion. The total outlay on cloud infrastructure in 2018 exceeded $80 billion -- that's up from $55 billion in 2017 according to that latest market study by Canalys.

This investment makes cloud computing services one of the most important sectors in the IT industry, not just by the rate of growth, but also due to its expanding size.

Cloud Computing Infrastructure Market Development

Amazon Web Services (AWS) remained the dominant cloud service provider in Q4 2018; its market share of customer spend unchanged at 32 percent. Microsoft Azure grew its share to 16 percent against 14 percent in the same period a year ago. Google Cloud reached 9 percent for the first time, while Alibaba Cloud maintained its 4 percent share.

IBM, Salesforce, Oracle, NTT Communications, Tencent Cloud and OVH rounded out the top 10 cloud service providers.

"Cloud infrastructure services provide the core components needed to support digital transformation initiatives around building new customer experiences, deploying IoT to transform processes, using big data and analytics for better insights, and embedding machine learning and AI for automation,” said Matthew Ball, principal analyst at Canalys.

Market dynamics have changed over the last 12 months, with more businesses opting for multi-cloud and hybrid IT environments to use the strengths of different cloud service providers and deployment models dependent on application and data requirements, compliance, cost and performance.

The role of channel partners in cloud services is growing in importance as a direct result of these trends. In particular, understanding customer requirements, recommending services, deployment and integration, as well as simplifying the billing and management of multiple cloud services.

According to the Canalys assessment, cloud service providers are placing greater emphasis on building channel programs to support the growing network of partners beyond the largest systems integrators, especially as they extend to mid-market and SMB customers.

Canalys expects the share of cloud business supported by or with channel partners to increase in 2019. Cloud service providers must therefore find new ways to improve their own differentiation to partners and raise the maturity of their channel models.

Outlook for Cloud Channel Partner Innovation

Canalys expects a greater focus on rewarding partners with specialist expertise around specific cloud deployments, such as SAP HANA, analytics or security; on partners developing unique services on top of cloud; and on those driving customer adoption of cloud services.

Cloud service providers should build trust with their channel partners and not implement initiatives or change terms and conditions that drive more direct sales, according to Canalys. Instead, they must offer superior marketing resources that enable channel partners to differentiate hybrid multi-cloud service capabilities in this very competitive marketplace.

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