Gartner: IaaS growth boosted during pandemic

Spending on public cloud infrastructure as a service (IaaS) grew almost 41% in 2020 and is now worth $64.3bn, according to the latest market data from analyst Gartner.

Amazon remains the largest IaaS provider, followed by Microsoft, Alibaba, Google and Huawei. Gartner said that these five organisations accounted for 80% of the IaaS market. Overall, almost 90% of all IaaS providers exhibited growth.

“Hyperscale providers are continuing to build distributed cloud and edge solutions that extend the public cloud’s reach into private and on-premise locations, addressing the needs of organisations relating to data sovereignty, workload portability and network latency,” said Sid Nag, research vice-president at Gartner. “This fact, coupled with reliance on the public cloud by a majority of organisations during the pandemic, drove another year of double digital market growth in 2020.”

Amazon earned $26.2bn of revenue from its IaaS business in 2020, representing 41% market share. Gartner’s IaaS revenue grew by 28.7% growth, which was slightly slower than that of the market. The analyst firm said that sales growth primarily reflected increased customer usage. 

Gartner reported that Microsoft was the second-largest IaaS provider. It posted IaaS revenue of $12.7bn in 2020, an increase of nearly 60% compared to the previous year. Gartner said that Covid-19 and disruption in workplace environments during the pandemic era drove increased demand from existing Microsoft Azure customers to migrate mission-critical workloads, such as from healthcare applications with AI-assisted bots, digital twins in manufacturing and e-commerce in retail.

The analyst firm stated that Alibaba remains the dominant IaaS provider in China. It grew 52.8% in 2020, with revenue surpassing $6bn, up from $4bn in 2019. Garter said Alibaba saw its highest growth rate in 2020 from the education sector, which grew 105%, driven by downloads of Alibaba’s enterprise communication and collaboration platform DingTalk among employees and students working and studying from home.

After its second consecutive year of over 200% growth in the IaaS market, Huawei broke into the top five IaaS suppliers for the first time in 2020, with $2.7bn in revenue. Over 90% of this revenue comes from Greater China, a region that continues to see rapid cloud market growth. “After 2019, Huawei made a hard pivot away from selling equipment to investing heavily in their cloud services business which is starting to yield results,” said Nag.

Google’s IaaS revenue grew 66% to reach nearly $4bn in 2020. Spending from the retail, government and healthcare sectors helped drive Google’s growth in IaaS in 2020, as did their focus on supporting the development and deployment of cloud applications in both a hybrid and multi-cloud model.

“The era of CIOs investing in cloud IaaS and platform as a service (PaaS) discretely is long over,” said Nag. “While the cloud market will continue to grow, the real opportunity for providers comes from growth in cloud-adjacent technology markets such as edge, 5G and AI, as CIOs look to invest in technologies that address their complex and emerging use cases.”