Gartner, the world’s leading market research company, has forecasted worldwide public cloud services market to grow 18 percent in 2017 to touch $246.8 billion. If you have been following the cloud industry, you might think that’s slow, but the reason for the 18 percent growth is that Gartner divides the overall cloud market into six segments.

Gartner global public cloud services forecast 2017
Gartner forecasts growth for public cloud services

“The overall global public cloud market is entering a period of stabilization, with its growth rate peaking at 18 percent in 2017 and then tapering off over the next few years,” said Sid Nag, research director at Gartner. “While some organizations are still figuring out where cloud actually fits in their overall IT strategy, an effort to cost optimize and bring forth the path to transformation holds strong promise and results for IT outsourcing (ITO) buyers. Gartner predicts that through 2020, cloud adoption strategies will influence more than 50 percent of IT outsourcing deals.”

But the real thrust for the cloud segment lies in the growth of two key segments: Infrastructure as a Service and Software as a Service. The difference between IaaS and PaaS has been getting smaller with each passing day, so if we want to know where the industry is headed we need to take a closer look at what the IaaS market is doing, and how quickly the SaaS market is picking up speed.

According to Gartner, the IaaS market was worth $25.29 billion in 2016 and is expected to nearly triple its size by 2020, while the SaaS market was $38.56 billion in 2016 and is expected to more than double by 2020. Both these segments have been growing at strong double digit rates for the past several years, and the above-50% growth rate that Amazon and Microsoft are enjoying in their respective cloud businesses shows that plenty of growth is yet to come.

Gartner validates that theory, as the IaaS market is forecasted to grow at strong double digits till 2020.

Cloud IaaS growth forecast
Cloud infrastructure growth

It must be also noted that the bulk of that growth will be carried by a few cloud vendors such Amazon, Microsoft, Google, Oracle and IBM. In 2016, Microsoft, Amazon and IBM say that their annual cloud revenues were around the 13 to 14 billion mark. That means the top vendors are walking away with the bulk of the market.

That trend is here to stay because the IaaS segment requires scale and size that can only be provided by companies that have deep pockets and the ability to stay in the market for a long time.




You can read the full Gartner Forecast here.

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