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Amazon continues to dominate global IaaS market - report

11 Aug 2020

The global infrastructure as a service (IaaS) market grew 37.3% year-on-year in 2019 to US$44.5 million – up from $32.4 billion in 2018, according to a new report from Gartner.

The report, released today, also ranked Amazon as the top performer in the market, followed by Microsoft, Alibaba, Google and Tencent. 

These top five providers accounted for 77% of the total market in 2018, and in 2019 this number swelled to 80%. Throughout all IaaS providers in the market, 75% saw growth in 2018.

“Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas,” says Gartner research vice president Sid Nag.

“It enables technologies such as the edge, AI, machine learning and 5G, among others. At the end of the day, each of these technologies require a scalable, elastic and high-capacity infrastructure platform like public cloud IaaS, which is why the market witnessed strong growth.”

Here's a closer look at the top five providers’ IaaS 2019 showings.

Amazon 

Despite decreasing its market share from 48% in 2018 to 45% in 2019, Amazon’s dominance of the IasS market remains largely unchanged. The company brought in an estimated $20 billion of revenue through IaaS, and built out its capabilities beyond the IaaS layer in the cloud stack to maintain its strength at the top.

Microsoft 

In second position was Microsoft, which saw its market share grow from 15.6% to 17.9% between 2018 and 2019. It brought in almost $8 billion in revenue, with more than half of that amount coming from North America alone.
 
Additionally, Microsoft’s IaaS offering grew 57.8% in 2019, as the company leveraged its sales reach and ability to co-sell its Azure offerings with other Microsoft products and services in order to drive adoption.

Alibaba Cloud

China’s dominant IaaS provider saw a 62.4% growth year-on-year in 2019, and brought in IaaS-related revenue of around $4 billion. It increased its market share from 7.7% in 2018 to 9.1% in 2019, and has indicated its intention to expand its cloud infrastructure business further, with an aim to offer cloud-based intelligent solutions.

Google 

Between 2018 and 2019, Google’s IaaS revenue grew 80%, from $1.3 billion to $2.4 billion. It also increased its market share slightly, from 4.1% to 5.3%. The company focused primarily on providing organisations with industry-specific solutions on its computing infrastructure.

Tencent

While second-best in China, Tencent saw by far the most growth in the top five IaaS providers – it grew by over 100% in 2019. The company also boosted its revenue, from $611 million in 2018 to $1.2 billion in 2019.

“As the cloud market matures, and its leaders experience natural market share erosion as a result, China-based providers such as Alibaba, Tencent and Huawei will start to gain more traction,” says Nag.

“It will also be hard for other providers, such as the North America based cloud providers, to enter the China market given the country’s highly regulated market,” says Nag.

“There will be a continued push of cloud spending as an outcome of the coronavirus pandemic.

“When enterprises were compelled to move their applications to the public cloud as a result of the pandemic, they realised the true benefits of public cloud and it is unlikely that they will change course,” says Nag.

“In the recovery and rebound phase, CIOs are recognising that they don’t need to bring workloads back on premises, which will further increase cloud spending and drive new applications around cloud-hosted collaboration that incorporate emerging technologies such as virtual reality and immersive video experiences.”