Cloud Services a $343 Billion Market by 2021!
Enterprises are driven to adopt off-premises cloud services to increase business agility and reduce costs. IHS Markit forecasts the global off-premises cloud services market to reach nearly $343 billion in 2021 — a CAGR of 22 percent from 2016 to 2021.
CSPs are continually looking for ways to innovate by integrating machine learning (ML) and artificial intelligence (AI) techniques into their services. These techniques give providers a clear a way to differentiate themselves by building teams of highly skilled experts that most enterprises cannot duplicate.
Silicon vendors are noticing the growing AI and ML trends as well and are putting themselves in a position to capitalize on the need for advanced infrastructure.
In H1 2017, several chip manufacturers announced AI-related products, including Fujitsu’s deep learning unit (DLU) microprocessor and Intel’s Loihi self-learning neuromorphic chip. On the software side, Google released Tensor2Tensor (T2T), its open-source library for training deep-learning models in TensorFlow.
Consolidation is prevalent in the cloud services market — as is the acquisition of complementary businesses. Just a few of the transactions in H1 2017 include Equinix’s acquisition of Verizon’s US and Latin American data centers and CenturyLink’s data center assets sale to BC Partners. Recently, Digital Realty agreed to merge with competitor DuPont Fabros in a deal valued at $7.6 billion, and Rackspace agreed to acquire Datapipe, a managed services provider.
The competitive landscape has changed as off-premises cloud service providers establish strong relationships with key companies that have large enterprise customer bases. Providers cannot depend on mergers and acquisitions as their sole paths to growth.
In this vein, we saw IBM and VMware announce plans to further their partnership by enabling enterprises to extend their VMware environments to the public cloud. And Google, Pivotal and VMware expanded their partnership to enable Pivotal Container Service (PKS), which allows enterprises and service providers to use Kubernetes on VMware vSphere and Google Cloud Platform. Meanwhile, Microsoft and Red Hat broadened their alliance by announcing new initiatives to enable enterprises’ adoption of containers.
Highlights
* In the first half of 2017 (H1 2017), global revenue for off-premises cloud services — including cloud as a service (CaaS), infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS) — grew 26 percent year over year to reach $72 billion.
* The fastest-growing segments were CaaS and PaaS, which increased 59 percent and 57 percent year over year, respectively; the gains were the result of increasing numbers of cloud service providers (CSPs) introducing container services and application developers adopting PaaS.
* Amazon was number one for IaaS in H1 2017, garnering 27 percent of IaaS revenue; IBM ranked first for SaaS, with 19 percent of SaaS revenue.
-- The authors are Cliff Grossner, senior research director and advisor, cloud and data center, IHS Markit, and Devan Adams, senior analyst, cloud and data center switching, IHS Markit.
