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Research Report Finds 52 Percent Growth in Cloud Infrastructure Services in Q2

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Research Report Finds 52 Percent Growth in Cloud Infrastructure Services in Q2

August 05, 2016
By Tracey E. Schelmetic
TMCnet Contributor

Economic growth in the tech and telecom sectors may be uneven, but one subset of this market is growing at an astonishing rate, according to research group Canalys. Worldwide cloud infrastructure services expenditure grew 52.3 percent year on year in the second quarter of 2016. This brings the total value of the cloud infrastructure services market to $9.5 billion in the second quarter of this year. The forecast data is derived from Canalys’ Cloud and Data Center Analysis service, which examines the factors that will accelerate or impede data center investment, as well as the dramatic shifts and disruptions in trends around data center expenditure and deployments.

The growth of the cloud infrastructure services market reflects the rapid uptake of these technologies by businesses as well as expanding use of consumer-centric services – social media, gaming and video streaming to name a few. Amazon’s AWS continues to be the leading cloud infrastructure services provider, and accounts for 30.4 percent of total spending. Amazon’s advantage, according to Canalys, was due to its foresight in giving customers what they wanted: aggressive pricing, broad geographic coverage and a wide range of service offerings.  And while Amazon may be the largest player in the cloud infrastructure services market, it has some up-and-coming competition: Microsoft (News - Alert) Azure, Google Cloud Platform and IBM SoftLayer are the three largest. Together with Amazon, these four providers now represent 60.5 percent of total worldwide cloud infrastructure services spend.

“The need for scalable and on-demand infrastructure is being driven by application testing, development and hosting; content delivery, big data and analytics; machine learning, IoT, disaster recovery and back-up; plus storage,” said Canalys Research Analyst Daniel Liu in a statement. “But not every organization and every workload will migrate to the cloud. Cost is a major issue, but also compliance and regulations, security concerns, and application readiness are determining factors in cloud migration strategies. The adoption of hybrid cloud and on-premises solutions is prevalent as organizations seek to get the best of both worlds.”

Growth varied strongly on region, as is to be expected. North America remained the largest market, representing 55.3 percent of the worldwide total, followed by EMEA (Europe, Middle East, Asia) at 24.7 percent, Asia Pacific at 15.9 percent and Latin America at 4.0 percent. For full-year 2016, Canalys has predicted that the worldwide market will grow 50.3 percent to reach $37.8 billion.

Some industry experts believe that the sinking fortunes of the telecoms market and the rapid growth of the cloud infrastructure market are strongly correlated.

“Web scale cloud (the really growing bit) is the home of the online services which are driving growth and prosperity in the overall communications market at the moment (Facebook, Amazon, Google (News - Alert) etc) and, some would say, draining growth and prosperity from telcos and many of their suppliers,” blogged Ian Scales for the Web site Telecom TV. “Also, the cloud, in one form or another, is where much of the telcos’ next generation network investment is going to be fed.”

Edited by Alicia Young

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