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October 12, 2017

Public cloud to rake in $260 billion thanks to SaaS, IaaS surge

Public cloud revenue growth has vastly exceeded expectations for 2017, with Amazon and Microsoft leading the way.

By Tom Ball

Global tech research firm, Gartner, has forecast worldwide public cloud revenue to hit $260 billion this year, with SaaS and IaaS driving growth in 2017.

It is expected that SaaS will experience 21 per cent growth in 2017, pushing it up to a robust $58.6 billion in revenue.

While the growth driven by SaaS is strong, its 2017 performance is set to be exceeded by major revenue growth generated by infrastructure as a service (IaaS), expected to haul in growth of 36.6 per cent, amounting to $34.7 billion.

Sid Nag, research director at Gartner, said: “Final data for 2016 shows that software as service (SaaS) revenue was far greater in 2016 than expected, reaching $48.2 billion… SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public cloud revenue forecast.”

A driving factor behind the revenue growth of SaaS is in its ability to out-perform traditional software by being specifically engineered to provide a more formidable business solution.

“Strategic adoption of platform as a service (PaaS) offerings is also outperforming previous expectations, as enterprise-scale organisations are increasingly confident that PaaS will be their primary form of application development platform in the future… This accounts for the remainder of the increase in this iteration of Gartner’s public cloud services revenue forecast,” said Mr Nag.

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Gartner foresees a colossal 70 per cent of the public cloud services revenue to be commanded by the top ten providers up to 2021. The top ten list includes the likes of industry behemoths Amazon, Microsoft, Oracle and SAP.

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Mr Nag said: “In the IaaS segment, Amazon, Microsoft and Alibaba have already taken strong positions in the market… In the SaaS and PaaS segments, we are seeing cloud’s impact driving major software vendors such as Oracle, SAP and Microsoft from on-premises, licence-based software to cloud subscription models.”

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