Public cloud spend surpassed $500bn in 2022, IDC

Driven by AI

Worldwide revenue for the public cloud services market totalled $545.8bn (£427.88bn) in 2022, an increase of 22.9% over 2021

SaaS continued to be the largest source of public cloud services revenue, accounting for more than 45% of the total in 2022.

Infrastructure as a service (IaaS) was the second-largest revenue category with 21.2% of the total, while platform as a service (PaaS) and SaaS - system infrastructure software (SaaS - SIS) delivered 17.0% and 16.7% of overall revenue, respectively.

This is according to new data from the IDC worldwide semi-annual public cloud services tracker.

"Given the economic challenges of the past year, it's easy to conclude that we are in a period where a focus on constraining new expenditures and optimising the use of existing cloud assets will dominate CIOs' priorities and shape the fortunes of IT providers for the next several years," said Rick Villars, group vice president of worldwide research at IDC.

"It's also a very wrong conclusion. The assessment and use of AI, triggered by generative AI, is starting to dominate the planning and long-term investment agendas of businesses and cloud providers will play a significant role in the evaluation and adoption of AI enablement services."

Where is spending going?

While overall IT spending seems to slowing down in recent months, spending with the leading providers of public cloud services further consolidated in 2022 with the combined revenue of the top five public cloud service providers - Microsoft, AWS, Salesforce, Google and Oracle - capturing more than 41% of the worldwide total and growing 27.3% year over year.

With offerings in all four deployment categories, Microsoft remained in the top position in the overall public cloud services market with 16.8% share in 2022, followed by AWS with 13.5% share.

While the overall public cloud services market grew 22.9% year over year in 2022, revenue for foundational cloud services that support digital-first strategies saw revenue growth of 28.8%.

This highlights the increasing reliance of enterprises on a cloud innovation platform built around widely deployed compute services, data/AI services, and app framework services to drive innovation.

IDC expects spending on foundational cloud services (especially IaaS and PaaS elements) to continue growing at a higher rate than the overall cloud market as enterprises leverage cloud to accelerate their shift toward digital business.

Dave McCarthy, research vice president, cloud and edge infrastructure services, said: "Cloud providers are making significant investments in high-performance infrastructure."

"This serves two purposes. First, it unlocks the next wave of migration for enterprise applications that have previously remained on-premises.

"Second, it creates the foundation for new AI software that can be quickly deployed at scale. In both cases, these investments are resulting in market growth opportunities."

Lara Greden, research director of platform as a service at IDC also explained: "IDC research shows that most organisations rank their public cloud provider as their most strategic technology partner, with general agreement among IT leaders and business leaders."

"When it comes to planning for PaaS developer and data services, organisations that haven't yet begun their journeys in developing AI-enabled applications are beginning to prioritize them.

"Those that have started to adopt AI are finding themselves well positioned to evaluate further adoption of generative AI capabilities in an intelligent app-strategy."

This article first appeared in CRN UK.