Global revenue generated by public cloud services has passed the $500 billion mark in 2022, according to new data released this week by research firm IDC.
The actual figure was $545.8 billion, according to IDC research, a sum that represents an increase of 22.9% over the previous year. Core cloud services, which IDC defines as infrastructure, platform, and system infrastructure software delivered as services, grew even faster, rising 28.8% year-over-year.
This critical spending, according to IDC, reflects the increasing reliance organizations have on data services and artificial intelligence, distributed computing, and application frameworks. Spending on IaaS and PaaS, in particular, should continue to grow faster than the broader public cloud market, to which cloud providers have responded by deploying increasingly high-performance infrastructure.
“This serves two purposes,” IDC research vice president Dave McCarthy said in the report. “First, it unlocks the next wave of migration for enterprise applications that previously stayed on-premises. Second, it creates the foundation for new AI software that can be rapidly deployed at scale. In both cases, these investments are generating market growth opportunities.”
IDC data also shows continued consolidation in the public cloud market. Although the top five public cloud service providers account for less than half of the market, their revenue grew faster than the overall market, at 27.3% last year.
Microsoft is the world’s largest public cloud provider, according to IDC data, accounting for 16.8% of the overall market, closely followed by AWS at 13.5%. (Salesforce, Google, and Oracle rounded out the top five.)
One of the main drivers of new public cloud spending will be generative AI, the IDC researchers said. AI capabilities are likely to be a central consideration for most organizations for the foreseeable future, and the importance of public cloud to any potential AI offerings cannot be underestimated.
“IDC research shows that most organizations rank their public cloud provider as their most strategic technology partner,” research director Lara Greenen said in the IDC report. “When it comes to planning PaaS developer and data services, organizations that have not yet begun their journey in developing AI-enabled applications are beginning to prioritize them. Those that have begun to adopt AI are well positioned to evaluate a increased adoption of generative AI capabilities in an intelligent application strategy”.
The largest spending area in 2022, according to IDC, was SaaS applications, with revenue of $246.3 billion, followed by IaaS with $115.5 billion.
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