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January 5, 2017

Adoption barriers disappear as 2016 sees cloud start to dominate the IT market

Another box is ticked for the growing cloud market.

By James Nunns

The start of 2017 brings more good news for cloud vendors around the world as annual revenues closed in on the $150 billion mark last year.

Not only is the cloud market now within touching distance of the $150bn mark, it is also growing at a rate of 25% – all by the fourth quarter ending September 2016.

That’s according to data from Synergy Research Group which looked at six cloud services and infrastructure market segments, operator and vendor revenues for the four quarters.

In a similar vein to research from other analyst firms, the Synergy research found that Infrastructure-as-a-Service and Platform-as-a-Service segments continue to grow at the fastest rate (53%), while private cloud infrastructure services grew at 35% and enterprise SaaS at 34%.

According to the Research Group, one of the most notable takeaways is that 2016 saw spend on cloud services overtake spend on cloud infrastructure hardware and software. The report also found that in aggregate cloud service markets are now growing three times more quickly than cloud infrastructure hardware and software.

Unsurprisingly the most prominent leaders in the IaaS & PaaS space are Amazon Web Services and Microsoft, with its Azure offering and IBM and Rackspace dominate the hosted private cloud segment.

Dominate Enterprise SaaS is dominated by Microsoft and Salesforce, while the UCaaS market leaders are Cisco and Citrix. Cisco and HPE leader the public cloud for Infrastructure hardware and software, while HPE and Dell EMC also lead this market for private cloud.

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Synergy Research Group’s founder and Chief Analyst Jeremy Duke, said: “We tagged 2015 as the year when cloud became mainstream and I’d say that 2016 is the year that cloud started to dominate many IT market segments.

Major barriers to cloud adoption are now almost a thing of the past, especially on the public cloud side. Cloud technologies are now generating massive revenues for technology vendors and cloud service providers and yet there are still many years of strong growth ahead.”

Synergy Research Group went on to reveal that over the period Q4 2015 to Q3 2016 total spend on hardware and software to build cloud infrastructure exceeded $65bn, with spend on private clouds accounting for over half of the total but spend on public cloud grew much more rapidly.

Investments in infrastructure by cloud service providers helped them to generate around $30bn in revenues from infrastructure services and over $40bn from enterprise SaaS.

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