The cloud-based infrastructure as a service (IaaS) market grew 29.5 percent in 2017 to total $23.5 billion worldwide, up from $18.2 billion in 2016, according to the latest figures from Gartner.

“IaaS adoption is being fully embraced by mainstream organizations as cloud availability expands into new regions and countries," says Sid Nag, research director at Gartner. For businesses that make use of the cloud, he notes that cloud-directed IT spending now constitutes more than 20 percent of their total IT budget, and that many of these companies are now using cloud to support production environments and business-critical operations.

The growth figures also provided further evidence that the market is consolidating around five leading vendors: Amazon, Microsoft, Alibaba, Google and IBM. Of these, the top four represent approximately 73 percent of the total IaaS market.

Amazon
Worldwide, Amazon is the clear market leader with 51.8 percent of the market. 2017 revenue was an estimated $12.2 billion, up 25 percent year-over-year. The largest of the IaaS providers, Gartner characterizes Amazon as the most mature, enterprise-ready provider, with the strongest track record of customer success and the most useful partner ecosystem. Its 2017 growth, the researcher says, was driven by migrations from traditional data centers as well as newer “transformational” digital business projects.

Of the top vendors, no. 2 IaaS provider Microsoft had the fastest growth rate by far. It’s 2017 IaaS revenue soared more than 98 percent over 2016, surpassing $3.1 billion and representing a 13.3 percent share of the market. The company provides its IaaS offerings through Microsoft Azure, a collection of infrastructure and platform services.

The third spot went to Alibaba, with a 4.6 percent market share. In Gartner’s estimation, the company’s 63 percent revenue growth in 2017 was the byproduct of a successful R&D program. In the researcher’s view, “Alibaba has the financial capability to continue this trend and invest in global expansion,” giving it the potential to become a viable alternative to Amazon and Microsoft.

Google, the no. 4 provider with a 3.3 percent market share, also grew rapidly in 2017, with a 56 percent jump in revenue from 2016. And IBM, in the fifth slot with a more modest 1.9 percent share of the market, also recorded stellar 2017 growth of 53.9 percent.

Commenting on the strong growth figures, Gartner’s Nag says they reflect “a fundamental change in what and how organizations are consuming technology."

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