Category Archives: Synergy Research

Cloud market growing 28% a year and worth $110 billion says study

Money cloudCloud services boomed in 2015 as the barriers to adoption toppled and confidence surged, says a new study. Operators and vendors in the six major cloud services and infrastructure market groups earned $110 billion in the four quarters ending in September 2015, according to new data from Synergy Research Group. This represents an annual growth rate of 28% on average.

The fastest growing sectors, Public Infrastructure as a Service (IaaS) and Platforms as a service (PaaS) grew at almost double the average rate, however, with a 51% increase in revenues in the 12 month period. Perhaps surprisingly, the public cloud is still growing at a faster rate than the hybrid cloud, which many pundits have tipped to be the immediate future for enterprise computing as companies hedge their bets between on and off-premise computing models.

The private and hybrid cloud infrastructure service markets grew by 45%. However, spending on infrastructure hardware and software is still higher than spending on cloud services, but the gap is narrowing rapidly. The top six companies in the hybrid cloud sector were identified as Cisco, HP Enterprise (HPE), AWS, Microsoft, IBM and Salesforce.

Even the lowest performing cloud sectors grew by 16%, Synergy reported.

The latest yearly figures, measured in the period from Q4 2014 to Q3 2015, showed that the total spend on infrastructure hardware and software to build cloud services exceeded $60 billion. Of that $60 billion, at least $30 billion was apportioned to private cloud projects. However, spending on public cloud projects, while in the minority, is growing much more rapidly.

The investments in infrastructure by the cloud service providers brought a return, the analyst says, as the figures show it helped them to generate $20 billion in revenues from cloud infrastructure services (IaaS, PaaS, private & hybrid services) and a further $27 billion from SaaS. There was also a return from additional income sources arising out of supporting internet services such as search, social networking, email and e-commerce. A new sector is emerging, as unified communications as a service (UCaaS) began to show healthy growth and, according to Synergy, is showing signs of driving some radical changes in business communications.

Last year the cloud became mainstream and moved beyond the early adopter phase as barriers to adoption fell, according to Synergy Research Group’s Chief Analyst Jeremy Duke. “Cloud technologies are now generating massive revenues and high growth rates that will continue long into the future,” said Synergy Research Group Chief Analyst John Dinsdale.

Public cloud generating $22 billion a quarter for IT Companies

metalcloud_lowresPublic cloud computing generated over $22 billion in revenues for IT companies in the second financial quarter of 2015, according to a study by Synergy Research Group.

The revenue breaks down into $10 billion earned by companies supplying public cloud operators with hardware, software and data centre facilities and $12 billion being generated from selling infrastructure, platforms and software as a service.

In addition the public cloud supports ‘huge’ revenue streams from a variety of internet services such as search, social networking, email and e-commerce platforms, says the report. It identifies the supply side companies with the biggest share of revenues as Cisco, HP, Dell, IBM and Equinix. On the cloud services side the market leaders are AWS, Microsoft, Salesforce, Google and IBM.

As the public cloud makes inroads into the total IT market, the hardware and software used to build public clouds now account for 24 per cent of all data centre infrastructure spending. Public cloud operators and associated digital content companies account for 47 per cent of the data centre colocation market.

While the total IT market grew at less than five per cent per year, the growth of cloud revenues outpaced it. Infrastructure and platform as a service revenues (Iaas/Paas) grew by 49 per cent in the past year and software as a service (SaaS) grew by 29 per cent.

“Public cloud is now a market that is characterized by big numbers, high growth rates and a relatively small number of global IT players,” said Synergy Research Group’s chief analyst Jeremy Duke.

However, the report noted that there is still a place for regional small-medium sized public cloud players.

Synergy Research: AWS still larger than four biggest rivals combined

AWS is larger than its four top rivals combined

AWS is larger than its four top rivals combined

Amazon pulled the curtain back from its AWS business last week, announcing its cloud services now rakes in over $5bn annually. John Dinsdale, chief analyst and research director at Synergy Research Group said that now puts the e-commerce giant ahead of most of its largest competitors.

Amazon recently reported its cloud business took in revenues of $1.57bn in the first quarter of 2015, and enjoyed close to 50 per cent growth year on year. This is the first time the e-commerce giant has publicly disclosed AWS revenues.

Following on from that, some vendors which shall remain nameless (AWS competitors) worked behind the scenes to remind press off how much more profitable their cloud businesses are by comparison. But Synergy Research data suggests AWS is far larger than most of its competitors combined, at least in the infrastructure services market specifically.

Microsoft enjoys the highest revenue growth rate and IBM is leading private & hybrid services segment, but according to Synergy AWS continues to grow faster than the market as a whole, and that its market share approached 30 per cent in the most recently reported quarter.

Google is quietly gaining share though it remains just half the size of Microsoft in this market, the firm said.

“Across the full and varied spectrum of cloud activities there are now six companies that can lay a valid claim to having annual cloud revenue run rates in excess of $5 billion – AWS, IBM, Microsoft, HP, Cisco and salesforce – and all are able to claim leadership in different parts of the cloud market,” Dinsdale said.

“However, on a strict like-for-like basis AWS remains streets ahead of the competition in cloud infrastructure services. Furthermore, this part of the cloud market is growing much more rapidly than SaaS or cloud infrastructure hardware and software.”

Like-for-like comparisons seems scarce in cloud revenue reporting, not the least of which because it’s such a nascent sector. Considering the market leader in cloud only just started publicly disclosing revenues tacked onto that business, it may be some time before vendors and service providers come up with standard definitions for what can be reported as ‘cloud’ (for instance, IBM recently reported its annual cloud revenues now exceed $7.7bn).

Synergy estimates quarterly cloud infrastructure service revenues (which includes IaaS, PaaS and private & hybrid cloud) now total exceed $5bn.