Cloud services growing faster than any IT market today – and tomorrow

New research from Gartner has shown the market for cloud services continues to expand at a breakneck pace.

The global infrastructure-as-a-service (IaaS) public cloud market surged 31 percent in 2016 to reach US$22.1 billion, up from $16.8 billion in 2015.

The three major players in the market are Amazon, Microsoft, and Alibaba, respectively.

"The market for cloud services is growing faster than virtually every other IT market today, with much of this growth coming at the expense of the traditional, noncloud offerings," says Sid Nag, research director at Gartner.

"The demand for cloud-based IaaS continues on its path of aggressive growth, and the high growth of IaaS is also driving growth in related cloud markets. While platform as a service (PaaS) and software as a service (SaaS) are also exhibiting strong growth, IaaS is expected to show the fastest growth over the next five years."

Amazon is displaying clear dominance over the market with a 44.2 percent market share for 2016, however there is significant above-market growth for the big three hyperscale IaaS cloud providers.

While the other main vendors gained momentum, Gartner expects the competitive pressures to cause growth erosion in Amazon's share as the non-hyperscale providers struggle to provide value through their services, while other IaaS market leaders will see an increase in growth.

According to Gartner, Amazon achieved its position at the top of the table by serving the most customers across the broadest range of use cases – which includes from cloud-native startups, to midmarket businesses wanting to lift and shift traditional applications, and all the way to enterprises executing transformational migrations to the cloud.

Microsoft sealed the distant second place in the IaaS market with a 7.1 percent share of the market, representing a whopping 61.1 percent increase from 2015. Gartner asserts the company achieved this growth with focused investment in the development of IaaS capabilities and in solid sales and marketing execution.

Alibaba may be in third place, but its staggering growth of 127 percent puts the company firmly as the current volume leader and dominant player in the cloud services market in China. The company also expressed its international intentions with four new data centers located in Europe, Australia, the Middle East and Japan.

"The worldwide public cloud service market growth continues, driven by digital business initiatives, data center consolidations and application migrations to the cloud," says Nag.

"Technology strategic planners must build both relevant offerings and partner-based ecosystems to seize the opportunity."