Public Cloud Spending Trends & IaaS Magic Quadrant Results

Traditional IT spending may be shrinking, but the public cloud market is still going strong. According to a recent Data Center Knowledge article, International Data Corporation (IDC) forecasts global public cloud spending to reach $195B by 2020. The economic and financial volatility in some regions will push demand further as increasing sophistication of the public cloud offerings allows organizations to fulfill their needs across a growing variety of IT domains. The fact that cloud expenses are operating expenses rather than capital expenses favors the cloud in a time of “tightening IT budgets”.

The Worldwide Semiannual Public Cloud Services Spending Guide forecasts $96.5 billion of spending in 2016, and a 20.4 percent compound annual growth rate from 2015 to 2020. The report shows that 16.3 percent of public cloud spending in 2015 was on IaaS, with cloud software accounting for the remaining 83.7 percent. The industries currently leading the public cloud spending are manufacturing, banking, and professional services. They currently account for more than third of the total revenue but are expected to be replaced by media, telecommunications, and retail in the coming five years.

It further divides cloud software into applications-as-a-service and system infrastructure software (SIS), which make up SaaS, and application development and deployment (AD&D), also known as PaaS. Infrastructure and platform revenues are expected to grow faster, however, than SaaS. The US will remain the leading regional market for public cloud revenues, while the greatest revenue growth will be in Latin America and Asia-Pacific excluding Japan. 

In other cloud related news, Gartner recently released the results of its Magic Quadrant for Infrastructure as a Service for 2016. The winners in the public cloud space are innovating and adding new features rapidly, while the losers are falling further and further behind.

Here’s a look at some of the highlights of the report – 

  • AWS is the clear leader in the IaaS space with “a diverse customer base and the broadest range of use cases.” Its partner ecosystem combined with its training and certification programs “makes it easier to adopt and operate AWS in a best-practice fashion,” Gartner says.

  • Microsoft Azure is considered one of the big three IaaS providers right now. Gartner says Microsoft’s strengths include integrated IaaS and PaaS components that “operate and feel like a unified whole”, rapid addition of new features and services, and becoming more open – including its support of Red Hat earlier
    this year.

  • Google’s capabilities in the IaaS space rely heavily on its own experience running the back-end of its behemoth search engine. In other words, Google allows other companies to “run like Google” which makes it the top contender for cloud-native use cases and applications.

  • With roots in OpenStack cloud, Rackspace has worked to be more technology-neutral, and shifted away from this to embrace “its roots as ‘a company of experts,’” offering managed AWS support and other managed services for third-party clouds. Rackspace is also strong when it comes to private cloud offerings.
  • While Gartner acknowledges that VMware is the market share leader in virtualization, vCloud Air has “limited appeal to the business managers and application development leaders who are typically the key decision makers for cloud IaaS sourcing.”

  • Though NTT Communications has a strong presence in Asia-Pacific – a challenging market for many IaaS providers – its basic cloud IaaS offering is not enough to set it apart from its competitors.

  • Gartner says that Fujitsu’s cloud IaaS capabilities “lag significantly behind those of the market leaders” and “it will continue to need to aggressively invest in acquiring and building technology in order to be competitive in this market.”


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