2023 cloud services revenues up nearly 20 per cent fuelled by AI investment
IDC expects global public cloud services revenue will surpass $800bn in 2024, an increase of 20.5 per cent over 2023
Global revenue for the public cloud services market ended 2023 on the same growth trajectory as seen in the first half of the year, according to IDC.
Total revenue came in at $669.2bn in the calendar year 2023, an increase of 19.9 per cent compared to 2022, IDC's worldwide semi-annual public cloud services tracker revealed.
In H1 2023, the analyst firm reported revenues for the public cloud services market of $315.5bn, a jump of 19.1 per cent compared to the same period in 2022.
Recently, fellow analyst house Gartner predicted global end-user spending on public cloud services will reach $675.4bn in 2024, also driven by AI.
However, genAI's contribution to the growth could have a negative effect on channel partners' ability to offer cloud solutions if they lack the expertise, the analyst warned.
"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," Gratner VP analyst Sid Nag told CRN.
IDC's latest data showed the largest source of public cloud services revenue in 2023 was software as a service – applications (SaaS – applications), which accounted for nearly 45 per cent of the market total.
Infrastructure as a service (IaaS) was the second largest revenue category with 19.9 per cent of total revenues, while platform as a service (PaaS) and software as a service – system infrastructure software (SaaS – SIS) delivered 18.4 per cent and 17 per cent of overall revenue respectively.
PaaS and SaaS – SIS were the categories with the fastest year-over-year revenue growth.
"In large part due to end-user investment in AI, PaaS revenue growth continues to outpace the overall cloud market," said Adam Reeves, research director, PaaS for developers of modern and edge applications.
"Both market share-leading vendors and smaller providers continue to release PaaS-delivered AI offerings. Vendors are focused on being strategic partners to their customers by delivering highly performant, developer-friendly, trustworthy, and secure offerings that help users deliver intelligent applications more efficiently."
The leading providers of public cloud services maintained their positions in 2023 with the combined revenue of the top five public cloud service providers – Microsoft, Amazon Web Services, Salesforce Inc., Google, and Oracle – capturing 40.5 per cent of the worldwide total.
With offerings in all four deployment categories, Microsoft remained in the top position in the overall public cloud services market with 16.8 per cent share in 2023, followed by Amazon Web Services with 12.4 per cent share.
IDC forecasts worldwide public cloud services revenue will surpass $800bn in 2024, an increase of 20.5 per cent over 2023 with a similar increase expected in 2025.
While the annual rate of growth will slow slightly over the forecast period, the market is still expected to deliver a five-year compound annual growth rate (CAGR) of 19.5 per cent with worldwide revenues reaching $1.6tr in 2028.
"The mainstreaming of AI is driving organisations to rethink their infrastructure strategy," said Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services.
"Public cloud IaaS will be an attractive source for AI-ready infrastructure as cloud service providers are heavily investing in the high-performance compute, storage, and networking services needed for AI workloads.
"The on-demand and pay-as-you-go tenets of cloud infrastructure facilitate access to the latest AI technology without large upfront investments or supply chain delays."