GenAI drives public cloud end-user spend, could spell trouble for some channel partners - Gartner

GenAI’s contribution to public cloud’s growth could lead to difficulty for channel partners offering cloud solutions owing to a lack of expertise

Global end-user spending on public cloud services is on the rise according to Gartner, driven by generative AI and application modernisation.

This is due to the continued creation of general-purpose foundation models and the ramp up to delivering genAI-enabled applications at scale.

"Because of this continued growth, we expect public cloud end-user spending to eclipse the one trillion dollar mark before the end of this decade," said Sid Nag, VP analyst at Gartner.

However, genAI's contribution to end-user spend in public cloud could have a negative effect on channel partners' ability to offer cloud solutions if they lack the expertise, the analyst warns.

"This is a difficult problem. Partners will have to quickly upskill to meet demand. Instead of trying to boil the proverbial ocean they will need to upskill around a few industries and specific use cases within an industry," Nag tells CRN.

Worldwide end-user spending on public cloud services is predicted to grow 20.4 per cent to $675.4bn in 2024, up from $561bn in 2023.

Nag however does think this growth is "good for the channel and partners" since it will create demand for more cloud services such as consulting, managed and support services.

Wider cloud market expected to grow

Cloud system infrastructure services (IaaS) continues at a robust growth rate compared to the other segments of the cloud market, reflective of the ongoing genAI revolution.

Nag adds that the need for infrastructure to undertake AI model training, inferencing and fine tuning has only been growing and will continue to grow exponentially and have a direct effect on IaaS consumption.

While cloud infrastructure and platform services are driving the highest spending growth, SaaS remains the largest segment of the cloud market in end-user spending. SaaS spending is projected to grow 20 per cent to total $247.2bn in 2024.

"SaaS spend is driven by applications being modernised by independent software vendors to run in a SaaS-based consumption model," said Nag.

"Organisations continue to increase their usage of cloud for specific use cases such as AI, machine learning, Internet of Things and big data which is driving this SaaS growth."