Global IaaS market increased by 31.3% in 2018 to $32.4bn
Gartner notes that cloud growth favours the dominant players as smaller firms lose market share
The infrastructure as a service (IaaS) market grew by 31.3% in 2018, the latest research from Gartner has revealed, rising from $24.7 billion in 2017 to $32.4 billion.
According to the research firm, Amazon continued to lead from the front last year, retaining its status as the number one vendor in the IaaS market, followed by Microsoft, Alibaba, Google and IBM.
In fact, the top five vendors increased their collective dominance, accounting for almost 77% of the worldwide market compared to less than 73% back in 2017.
"Despite strong growth across the board, the cloud market's consolidation favours the large and dominant providers, with smaller and niche providers losing share," commented Sid Nag, research vice president at Gartner. "This is an indication that scalability matters when it comes to the public cloud IaaS business.
"Only those providers who invest capital expenditure in building out data centres at scale across multiple regions will succeed and continue to capture market share. Offering rich feature functionality across the cloud technology stack will be the ticket to success, as well."
Gartner added that market consolidation will continue through 2019, driven by the continued high rate of growth for the top providers. From 2017 to 2018, these big-name vendors experienced aggregate growth of 39% compared with 11% for all other providers for the period.
"Consolidation will occur as organisations and developers look for standardised, broadly supported platforms for developing and hosting cloud applications," Nag said.
Accounting for almost half the global IaaS market alone, market leader Amazon racked up an estimated $15.5 billion of revenue in 2018, up 27% from the previous year, as it continues to "aggressively" expand into new IT markets via new services, acquisitions and growth of its core cloud business.
For the second-placed Microsoft, which delivers its IaaS capabilities via its Azure offering, revenue surpassed $5 billion last year, up from the $3.1 billion recorded in 2017.
Elsewhere, China's dominant IaaS provider Alibaba Cloud recorded the strongest growth out of the big five vendors, expanding by 92.6% in 2018. Having built up an ecosystem of MSPs and independent software vendors, its success has been driven by aggressive R&D investment in its portfolio of offerings, with the firm also boasting the financial capacity to continue this trend and invest in global expansion.
Google placed in the fourth spot, growing 60.2% in revenue from 2017, with Gartner suggesting its cloud offering is "something to keep an eye on" thanks to its new leadership focus on customers and the enterprise.
"As the cloud business continues to gather momentum and hyperscale cloud providers consolidate the market, product managers at cloud MSPs must look at other ways to differentiate, such as focusing on vertical industries and getting certified in the hyperscale cloud provider partner programmes in order to drive revenue," Nag commented.