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- Morgan Stanley predicts Microsoft cloud products will be 30% of revenue by 2018.
- In 2015, Amazon Web Services (AWS) generated $7.88B in revenue with Q4 2015, up 69% over last year.
- Worldwide spending on public cloud services will grow at a 19.4% compound annual growth rate (CAGR) from nearly $70B in 2015 to more than $141B in 2019.
These and many other insights are from the latest series of cloud computing forecasts and market estimates produced by IDC, Gartner, Microsoft and other research consultancies. Amazon’s decision to break out AWS revenues and report them starting in Q1 FY2015 is proving to be a useful benchmark for tracking global cloud growth. In their latest quarterly results released on January 28, Amazon reported that AWS generated $7.88B in revenues and attained a segment operating income of $1.863B. Please see page 8 of the announcement for AWS financials. For Q4, AWS achieved a 28.5% operating margin (% of AWS net sales).
Additional key takeaways from the roundup include the following:
- In 2016, spending on public cloud Infrastructure as a Service hardware and software is forecast to reach $38B, growing to $173B in 2026. SaaS and PaaS portion of cloud hardware and infrastructure software spending are projected to reach $12B in 2016, growing to $55B in 2026. The following graphic provides an overview of spending on public cloud infrastructure worldwide from 2015 to 2026.
- Worldwide Public IT Cloud Service Revenue in 2018 is predicted to be $127B. Managed Services is projected to reach $256B by 2018. Emerging markets are predicted to be 21% of the Worldwide Public IT Cloud Services market by 2018.
Source: Microsoft Cloud Landscape Update, 2015, (RHP).
- Morgan Stanley as predicting Microsoft cloud products will be 30% of revenue by 2018. Office365, CRM, and Azure will increase from 11% of revenue in 2015 to 30$ in 2018. The following graphic compares the distribution of revenue by source for Microsoft Commercial revenue in 2015 and 2018.
Source: RHP Investor Briefing, 1H, 2016. Half-year Results Presentation, 18th February 2016.
- In 2015, Amazon Web Services (AWS) generated $7.88B in revenue with Q4 2015, up 69% over last year. VentureBeat’s financial analysis of AWS performance also found AWS profitable, contributing $687M in operating income for the quarter, up $240M from one year earlier.
Source: Amazon Web Services brings in $2.4B in revenue in Q4 2015, up 69% over last year.
- The worldwide cloud computing market grew 28% to $110B in revenues in 2015. Synergy Research Group found that public IaaS/PaaS services attained the highest growth rate of 51%, followed by private & hybrid cloud infrastructure services at 45%. The following graphic below compares cloud growth by segment and market leaders.
- TBR predicts worldwide public cloud revenue will increase from $80B in 2015 to $167B in 2020. TBR found that 49% of the market believes public cloud is just as or more secure than private cloud.
- IDC predicts cloud IT infrastructure spending will grow at CAGR of 15.1% from 2014 to 2019, reaching $53.1B billion by 2019. By 2019, IDC predicts cloud IT infrastructure spending will be 46% of total expenditures on enterprise IT infrastructure.
- Wikibon’s analysis determined that the current (overall) market size of True Private Cloud implementations is $7B, well below the IaaS Public Cloud market in 2015 ($25B), and smaller than Public Cloud leader Amazon Web Services ($7.9B in 2015). This market sizing is delivered both on-premises by IT departments to their business, as well as by Managed/Hosted Cloud providers and is shown in the following graphic.
Source: Public Cloud IaaS is 3.5X the Size of True Private Cloud Adoption
- The global Platform-as-a-Service (PaaS) market is projected to reach $7.5B by 2020. Global Industry Analysts predicts that the Asia-Pacific region will lead geographic growth, attaining a CAGR of 20.9% through 2020. Source: Global Industry Analysts, Inc., Platform as a Service (PaaS) Market Trends
- IDC predicts external cloud adoption will increase from 22% today to 32.1% in 24 months achieving 45.8% growth. The multiclient study also found that over 70% of heavy cloud users are considering a "hybrid" cloud strategy and over 40% of heavy cloud users plan to spend money on open source and standards projects. Source: IDC's Latest CloudView Multiclient Study Reveals Attitudes and Strategies of the 58% of Organizations Embracing Cloud, February 26, 2016
- Bessemer Venture Partners (BVP) is finding that the faster the revenue growth, the higher the revenue multiples achieved with Atlassian, Workday, ServiceNow and Xero leading cloud vendors’ revenue multiples. The venture capital firm found an R2 of .36068 when 2015 – 2016 Revenue Growth and 2016 Revenue Multiples are analyzed. The following graphic shows their analysis.
- 451 Research’s Market Monitor forecasts that the market for cloud computing ‘as a service’ – which includes PaaS, IaaS and infrastructure software as a service (ITSM, backup, archiving) – will hit $21.9B in 2016 more than doubling to $44.2bB by 2020. Source: After a decade of dominance, what’s next for AWS?
- By 2020, over 50% of all new applications developed on PaaS will be IoT-centric, disrupting conventional architecture practices. Source: Predicts 2016: PaaS Innovation Continues Unabated 10 December 2015 G00293230 Analyst(s): Yefim V. Natis, Lydia Leong, Benoit J. Lheureux, Paul Vincent
- By 2020, penetration of software as a service (SaaS) versus traditional software deployment will be over 25%. Packaged software will shrink to 10% of new enterprise installations. In 2012, 60% of SaaS providers delivered services from do-it-yourself datacenters. By 2020, that number will be less than 50%. SaaS will begin to “live” in the cloud. Source: IDC 50th Anniversary, Transformation Everywhere.
- Worldwide spending on public cloud services will grow at a 19.4% compound annual growth rate (CAGR) from nearly $70B in 2015 to more than $141B in 2019. IDC predicts Software as a Service (SaaS) will remain the dominant cloud computing type, capturing more than two-thirds of all public cloud spending through most of the forecast period. Worldwide spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at a faster rate than SaaS with five-year CAGRs of 27.0% and 30.6%, respectively. Source: Worldwide Public Cloud Services Spending Forecast to Double by 2019, According to IDC.
Additional Resources:
- 2016 State of Cloud Report (Rightscale)
- Another Bullish Forecast for Cloud Adoption
- Bessemer's 10 Laws of Cloud Computing
- Gartner Says Worldwide Cloud Infrastructure-as-a-Service Spending to Grow 32.8 Percent in 2015.
- The Forrester Wave™: Enterprise Public Cloud Platforms, Q4 2014
- Hybrid Cloud: The New Standard for Delivery of Digital Transformation
- IDC's Latest CloudView Multiclient Study Reveals Attitudes and Strategies of the 58% of Organizations Embracing Cloud
- Survey: 93% of Organizations Use Cloud-based IT Services
- The state of cloud computing in Europe
- Why Custom Apps Grew $100B In The Last 5 Years
- Worldwide Competitive Public Cloud PaaS Forecast, 2015–2019.
- Worldwide Cloud IT Infrastructure Spend Grows 23.0% to $7.6 Billion in the Third Quarter, According to IDC
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