Gartner is predicting the worldwide public cloud services market will grow from $182.4B in 2018 to $214.3B in 2019, a 17.5% jump in just a year. Photo credit: Getty
- Gartner predicts the worldwide public cloud service market will grow from $182.4B in 2018 to $331.2B in 2022, attaining a compound annual growth rate (CAGR) of 12.6%.
- Spending on Infrastructure-as-a-Service (IaaS) is predicted to increase from $30.5B in 2018 to $38.9B in 2019, growing 27.5% in a year.
- Platform-as-a-Service (PaaS) spending is predicted to grow from $15.6B in 2018 to $19B in 2019, growing 21.8% in a year.
- Business Intelligence, Supply Chain Management, Project and Portfolio Management and Enterprise Resource Planning (ERP) will see the fastest growth in end-user spending on SaaS applications through 2022.
Gartner’s annual forecast of worldwide public cloud service revenue was published last week, and it includes many interesting insights into how the research firm sees the current and future landscape of public cloud computing. Gartner is predicting the worldwide public cloud services market will grow from $182.4B in 2018 to $214.3B in 2019, a 17.5% jump in just a year. By the end of 2019, more than 30% of technology providers’ new software investments will shift from cloud-first to cloud-only, further reducing license-based software spending and increasing subscription-based cloud revenue.
The following graphic compares worldwide public cloud service revenue by segment from 2018 to 2022. Please click on the graphic to expand for easier reading.
Comparing Compound Annual Growth Rates (CAGRs) of worldwide public cloud service revenue segments from 2018 to 2022 reflects IaaS’ anticipated rapid growth. Please click on the graphic to expand for easier reading.
Gartner provided the following data table this week as part of their announcement:
- Business Intelligence, Supply Chain Management, Project and Portfolio Management and Enterprise Resource Planning (ERP) will see the fastest growth in end-user spending on SaaS applications through 2022. Gartner is predicting end-user spending on Business Intelligence SaaS applications will grow by 23.3% between 2017 and 2022. Spending on SaaS-based Supply Chain Management applications will grow by 21.2% between 2017 and 2022. Project and Portfolio Management SaaS-based applications will grow by 20.9% between 2017 and 2022. End-user spending on SaaS ERP systems will grow by 19.2% between 2017 and 2022.
Sources: Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17.5 Percent in 2019 and Forecast: Public Cloud Services, Worldwide, 2016-2022, 4Q18 Update (Gartner client access)
Gartner’s latest forecast of the public cloud services market predicts that by 2015, this worldwide market will be worth $176.8 billion, achieving a five-year compound annual growth rate (CAGR) of 18.9%.
Their latest forecast is based on defining the public cloud services market from revenue generation, not an IT spending perspective. This is in contrast to the public cloud services forecast IDC also released this week, stating that public IT cloud services spending would reach $72.9B by 2015. Of the two approaches, the one that is revenue-based delivers a more granular, detailed look at Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) challenges and opportunities for growth (see tables below for details). The Gartner report, Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update, was published on June 29, 2011.
Gartner’s decision to base their methodology on revenue generated versus pure IT spending opens up the potential to evaluate entirely new business models based on services growth. The forecast is based on revenue either directly or indirectly generated from the sales of services and from sales to enterprise or consumers. Business process services are defined in this forecast as any process that can be delivered as a service over a scalable, elastic and secure connection over the web. This includes advertising, payroll, printing, e-c0mmerce, in addition to applying applications and systems infrastructure. Presented below are key take-aways and analysis from the reports.
- By 2015, the total market will be worth $176.8 billion, which represents a five-year compound annual growth rate (CAGR) from 2010 of 18.9%. The largest part of this is revenue derived from advertising that is used to provide IT services ($77.1 billion in 2015), which represents an addition to the total size of the IT market.
- The transition of software from licensed to service models continues, but it has yet to reach breakthrough proportions (9.6% in 2010, rising to 13.8% in 2015). Traditional outsourcing services also continue to transition to cloud delivery models, involving a high degree of service standardization. Gartner continues to take a conservative view of revenue recognition in terms of SaaS adoption compared to other research firms as is shown in the following table.
- Application and systems infrastructure are projected to grow the fastest in terms of revenue generation through 2015, with advertising-related revenue being a significant proportion of the total public cloud services market through the forecast period. The following table breaks out public cloud revenue globally by business process services, applications, application infrastructure and systems infrastructure.
- The high-tech, manufacturing and financial services sectors and the public sector will continue to be the most-aggressive adopters of cloud services through 2015. Presented below is a table comparing cloud services revenue by industry sector.
- The North American market continues to be, by far, the largest regional market representing 60% of the global market currently, but growth in China remains of interesting potential.
- Financial services organizations in aggregate represent the largest users of public cloud services.
- Some smaller countries will demonstrate very high growth (more than 25%) in e-commerce cloud services, because of high growth in underlying retail e-commerce. The Census Bureau of the U.S. Department of Commerce estimates that e-commerce sales in the fourth quarter of 2010 accounted for 4.3% of total U.S. retail sales.
Bottom line: Taking a revenue-based approach to defining cloud services shows how critical the application and system infrastructure is to overall market growth. Gartner predicts the fastest growing revenue generating segment of public clouds will be storage services (89.5%) followed by Compute Services (47.8%) and supply management (39.5%).