News & Insights for the AI Journey|Friday, March 22, 2019
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Cloud Revenues Approached $70B in 2018 

If there was any doubt about the shift to cloud computing, look no further than end-of-the-year revenue totals compiled by Synergy Research Group. The market watcher calculates that cloud providers racked up nearly $70 billion in infrastructure revenues during 2018.

That revenue total was driven by a 45 percent jump in cloud infrastructure spending during the most recent fourth quarter, Synergy reported. For 2018, the growth rate for cloud services jumped a whopping 48 percent as more companies diversified their cloud services to avoid vendor lock-in and boost enterprise application availability.

That transition fueled year-on-year market share growth among the Big Three cloud providers, Amazon Web Services (NASDAQ: AMZN), Microsoft Azure and Google Cloud Platform. Microsoft (NASDAQ: MSFT) was the biggest beneficiary of the multi-cloud strategy, boosting its global cloud market share to about 16 percent, up 3 percentage points from the same quarter in 2017. Google’s (NASDAQ: GOOGL)share rose incrementally year-on-year to about 7 percent.

Despite the steady shift for multi-cloud deployments, market leader AWS extended its dominance with about 35 percent of global cloud services by the end of 2018, Synergy reckons.

IBM (NYSE: IBM) was the only cloud provider among the top five to lose market share over the past year, declining to about 7 percent during the fourth quarter. “IBM’s prime focus is a little different from the others as it remains the strong leader in the hosted private cloud services segment of the market,” the analyst noted.

Chinese cloud giant Alibaba (NYSE: BABA) gained a percentage point, accounting for about 4 percent of the global cloud market. Meanwhile, all other cloud providers lost market share on an annual basis.

The fourth quarter of 2018 “tops off a banner year for the cloud market with the annual growth rate actually nudging up from the previous year, which is an unusual phenomenon for a high-growth market of this scale,” said John Dinsdale, chief analyst at Synergy Research Group.

“In aggregate, the top five [cloud providers] drove up their revenues in these segments by 60 percent in 2018, which has caused us to review and increase our five-year forecast for the market,” Dinsdale added.

Reflecting the booming and cut-throat cloud services market,Google announced earlier this month it plans to invest $13 billion this year in datacenter and office expansion across 14 states. Google’s new cloud boss, former Oracle (NYSE: ORCL) executive Thomas Kurian, said recently the search giant would compete more aggressively this year in the public cloud market.

An AWS user survey released in January found that 35 percent of those surveyed said their organization “actively uses” Microsoft Azure along with AWS. Twenty-four percent of multi-cloud adopters said they used Google Cloud Platform in combination with the AWS public cloud.

Synergy’s quarterly cloud market share estimates include infrastructure and platform services as well as hosted private clouds. Those categories accounted for nearly $20 billion in fourth quarter cloud revenues, the market tracker said.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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