September 19, 2012 – The cloud infrastructure market is expected to flourish over the next four years, gaining nearly 50 percent by the end of 2012 compared with last year and rivaling SaaS in investment by 2016, according to a new market report.
Gartner Research just released an update of its worldwide public cloud services overview, which includes overall growth in cloud investment that is slated to hit $109 billion worldwide this year, a 19.6 percent increase. Additionally, the public cloud services market is expected to nearly double to $206.6 billion in 2016, according to Gartner estimates.
The overall public cloud growth figures are consistent with estimates Gartner released in July, though the update provides far more detail on the expansion of various as-a-service sectors. That includes a huge boost in the infrastructure as a service sector, which is forecast to reach $6.2 billion in worldwide spending this year, up from $4.3 billion in 2011. Two years ago, IaaS was less than one-third of the size of the SaaS market, though Gartner predicts it will nearly equal SaaS in size by 2016.
Gartner Research Director Ed Anderson says IaaS may eclipse SaaS in terms of market size based on a few factors, such as the “predominance of standardized services” – IaaS involving the purchase of raw computer power or storage capacity rather than the broad range of applications under SaaS – and increased enterprise comfort.
“We believe that the market has reached a tipping point now where we are moving to more mainstream adoption of cloud infrastructure services because consumers believe the models are viable, and there are good examples of the early adopters being successful. Beyond consumer acceptance, which is a critical indicator, we are also seeing a rush of providers entering this part of the cloud market,” Anderson says. “For example, in the past two months, both Microsoft and Google have introduced IaaS offerings. These are examples of the legitimization of the market. In short, rising customer demand is being met with rising provider supply, driving growth in this market.”
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And with more services offered in the cloud, the role of in-house IT is developing primarily into that of a provider for business clients, Anderson says.
“As IT starts to see themselves more as a provider of IT services, rather than an implementer of IT services, they will be more inclined to look for the best (and most cost-effective) solutions to meet the enterprise needs. This will ultimately change their role and will require a new set of skills for most organizations,” says Anderson.
At 77 percent of the overall public cloud market pie, the Business Process as a Service (BPaaS) segment remains the largest in Gartner’s figures mostly because it includes the sub-segment of cloud advertising. Cloud advertising services totaled nearly half of the total public cloud services market in 2011, and that percentage chunk of spending is expected to remain about the same through this massive period of overall market growth into 2016. Gartner figures BPaaS to notch $84.2 billion in 2012, up more than $12 billion from 2011’s total.
PaaS remains a “strategic” investment, and thus smaller than its cloud service counterparts, according to Gartner. Although it is only anticipated to grow to $1.2 billion this year, Gartner slots it as a “critical growth driver” for other, larger areas like BPaaS and SaaS. There is also a small but increasing interest in what Gartner calls cloud management and security, a segment that includes security services, IT operations and backup and recovery management. That market is expected to reach $3.3 billion worldwide investment this year, the first in which Gartner has tracked it as a combined as-a-service market segment.
By region, North America will continue to lead in terms of public cloud adoption and investment size, with 61 percent growth going back to 2010 and through 2016. While India, Indonesia and China represent the top three growth nations, 79 percent of actual spending will still be led by North America and Western Europe over the next four years, according to Gartner.