Microsoft, Amazon, Salesforce Inc., Google, and Oracle dominate market
The public cloud services market experienced substantial growth in 2022, reaching a total revenue of $US545.8 billion, according to the International Data Corporation (IDC) Worldwide Semi-annual Public Cloud Services Tracker. Software as a Service – Applications (SaaS – Applications) accounted for over 45 per cent of the total revenue, solidifying its position as the largest revenue source in the public cloud services market. Infrastructure as a Service (IaaS) followed closely with 21.2 per cent of the total revenue, while Platform as a Service (PaaS) and Software as a Service – System Infrastructure Software (SaaS – SIS) contributed 17.0 per cent and 16.7 per cent of the revenue respectively.
Rick Villars, group vice president, Worldwide Research at IDC, emphasized the increasing importance of artificial intelligence (AI) in business planning and long-term investment agendas. Generative AI is driving the adoption of AI enablement services, with cloud providers playing a significant role in evaluating and facilitating this adoption.
The market continues to be dominated by the top providers of public cloud services. The combined revenue of Microsoft, Amazon Web Services, Salesforce Inc., Google, and Oracle accounted for more than 41 per cent of the worldwide total, growing by 27.3 per cent year over year. Microsoft held the top position in the overall public cloud services market with a 16.8 per cent share, followed by Amazon Web Services with a 13.5 per cent share in 2022.
While the overall public cloud services market grew by 22.9 per cent in 2022, revenue for foundational cloud services, which support digital-first strategies, experienced even higher growth at 28.8 per cent. This indicates the increasing reliance of enterprises on cloud innovation platforms to drive innovation and accelerate their shift toward digital business. IDC predicts that spending on foundational cloud services, particularly IaaS and PaaS, will continue to grow at a higher rate than the overall cloud market.
Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services, highlighted the investments made by cloud providers in high-performance infrastructure. These investments unlock opportunities for migrating enterprise applications to the cloud and facilitate the deployment of new AI software at scale, driving market growth.
Lara Greden, research director, Platform as a Service, IDC, noted that organizations are prioritizing PaaS developer and data services in their AI-enabled application development journeys. Those organizations that have already adopted AI find themselves well-positioned to evaluate the adoption of generative AI capabilities for intelligent app strategies.
Frank Della Rosa, research vice president, SaaS, Business Platforms, and Industry Cloud at IDC, highlighted the dominance of SaaS – Applications in the cloud software market, which is forecasted to exceed $US547 billion by the end of 2023. The next generation of SaaS applications is expected to leverage advancements in AI, delivering enhanced personalization, customer experience, and operational efficiency while reshaping functional markets across industries.
While a small number of companies lead the foundational cloud services and SaaS – Applications markets, there is a healthy long tail of companies worldwide delivering cloud services. In the foundational cloud services market, the top five companies account for three-quarters of the market’s revenues, offering targeted use case-specific PaaS services or cross-cloud compute, data, or network governance services. In the SaaS – Applications market, customer focus on specific outcomes ensures that nearly two-thirds of spending is captured outside the top five companies.