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June 23, 2022updated 05 Aug 2022 10:06am

Public cloud spending grows 26% as AWS, Azure and Google Cloud cash in

Spending in the public cloud is soaring, meaning the hyperscale providers are investing heavily in their infrastructure.

By Matthew Gooding

Global spending on public cloud grew by 26% to reach $126bn in the first quarter of 2022, new figures show, with infrastructure as a service (IaaS) and platform as a service (PaaS) seeing the steepest increases.

The big three hyperscale public cloud providers – Amazon’s AWS, Microsoft Azure and Google Cloud – have been the biggest beneficiaries of this growth. To meet this growing demand, they are ramping up their data centre investments, the figures show.

public cloud server
Spending on servers and other data centre equipment is on the rise. (Photo by CasarsaGuru/iStock)

Data from Synergy Research Group shows that total IaaS and PaaS revenue for the first quarter of 2022 was $44bn, up 36% on the 2021 figure, with strong growth also reported in other areas.

“Public cloud-related markets are typically growing at rates ranging from 15% to 40% per year, with PaaS and IaaS leading the charge,” said John Dinsdale, a chief analyst at Synergy Research Group. “Looking out over the next five years the growth rates will inevitably tail off as these markets become ever-more massive, but we are still forecasting annual growth rates that are generally in the 10% to 30% range.”

Public cloud revenue growth benefits the hyperscale cloud providers

The big three hyperscale cloud providers – AWS, Azure and Google Cloud – occupy nearly two-thirds of the public cloud market, according to Synergy’s analysis, with a combined 64% share. AWS has the largest public cloud market share, with 33%, followed by Azure with 21% and Google Cloud with 10%.

Elsewhere, the managed private cloud services and enterprise SaaS segments both saw revenues grow 21% year-on-year, while spending on content delivery networks (CDNs) was up 13%. Here companies outside the hyperscale cloud providers benefited, Synergy says, with IBM, Salesforce and Adobe cashing in, as well as specialist CDN providers Akamai and Cloudflare.

Indeed, Salesforce saw revenue up 26% in the first quarter of the year, while IBM grew hybrid cloud income by 17% (the company does not break out private cloud revenue) and Adobe reported a record Q1, with income of $4.26bn.

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Spending is on the rise for public cloud data centres

As their revenues grow, the hyperscale cloud providers are building new data centres around the world, and in the first quarter of 2022 public cloud providers spent $28bn on building, leasing and equipping their data centre infrastructure, up 20% year-on-year.

Synergy reports that spending on new data centres grew 15% year-on-year in the first quarter of 2022, with investment in growing capacity at existing sites up 18%. The hyperscale cloud providers led the way on this, Synergy says.

Spending on data centre hardware and software, and on leasing server space, also saw big year-on-year growth.

What next for public cloud?

Microsoft expects to build 50-100 new data centres around the world each year for the foreseeable future, and Synergy Research Group's Dinsdale says this level of investment will need to continue to meet demand.

“To enable cloud service markets to keep up with demand by doubling in size in the next three-four years, the major cloud providers need an ever-larger footprint of hyperscale data centres and more raw computing power, which then drives the markets for data centre hardware and software," he says. "For sure the competition will be tough, but up and down the cloud ecosystem there will be a bright future for companies that bring the right products to market in a timely fashion.”

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Read more: AWS to double UK investment with £1.8bn pledge

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