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Global IaaS market hit $64.3 billion in 2020

Tue 29 Jun 21

The global infrastructure as a service (IaaS) market reached $64.3 billion last year, up from $45.7 billion in 2019, according to a report released today by Gartner.

The 40.7% boost in the market was accompanied by another positive statistic for the industry: almost 90% of all IaaS providers exhibited growth. 

Gartner also revealed that market share was remarkably consolidated in 2020 — the top five IaaS providers accounted for 80% of the market. Amazon retained the top position in the sector, followed by Microsoft, Alibaba, Google and Huawei, respectively.

Gartner research vice president Sid Nag says, “Hyperscale providers are continuing to build distributed cloud and edge solutions that extend the public cloud’s reach into private and on-premise locations, addressing the needs of organisations relating to data sovereignty, workload portability and network latency.

“This fact, coupled with reliance on the public cloud by a majority of organisations during the pandemic, drove another year of double digital market growth in 2020.”

Amazon brought in $26.2 billion of revenue through its IaaS business last year, and represented 41% of the total market share. But while its revenue and share were higher, its growth, at 28.7%, was slightly lower than its competitors.

Microsoft held on to its number 2 position in the market, reaching $12.7 billion in revenue for 2020. Its growth for that period was double that of Amazon’s at 60%, and Gartner says this was driven by boosted demand from existing Azure customers to migrate mission-critical workloads. 

Alibaba, the third-largest player in the IaaS market, saw similar growth margins to Microsoft’s at 52.8%. It brought in $6 billion in revenue last year and experienced its highest growth rate in the education vertical at 105%. This was driven, says Gartner, by downloads from remote workers of Alibaba’s enterprise communication platform DingTalk.

Google took fourth place with $4 billion in revenue last year and a 66% growth rate. Gartner says much of its success derived from spending from the retail, government and healthcare sectors.

Experiencing by far the largest growth of the major players, Huawei saw over 200% growth in 2020, which propelled it to the top five for the first time. It achieved $2.7 billion in revenue — over 90% of which came from the Greater China region. “After 2019, Huawei made a hard pivot away from selling equipment to investing heavily in their cloud services business which is starting to yield results,” says Nag.

Nag says the era of CIOs investing in cloud IaaS and platform as a service (PaaS) discretely ‘is long over’.

“While the cloud market will continue to grow, the real opportunity for providers comes from growth in cloud-adjacent technology markets such as edge, 5G and AI, as CIOs look to invest in technologies that address their complex and emerging use cases,” Nag says.

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