Enterprise Cloud Spending Boom Crowds Out Non-Cloud Tech Budgets

Enterprise spending on cloud infrastructure and services dominated IT spending in some areas last year, to the point of crowding out growth opportunities for some other, non-cloud tech, according to a new study.

Synergy Research found that enterprise cloud spending continued to grow at a breakneck pace in 2018, and said it expects the market to double by the end of 2022.

“While market growth rates will inevitably erode due to the sheer scale of the numbers, the overall market will double in size in under four years,” Synergy chief analyst John Disdale predicted in a research note.

Vendor and cloud service operator revenues, measured across seven principal cloud services and infrastructure segments, surpassed $250 billion (£194bn) in 2018, growing 32 percent year on year, Synergy found.

Services boom

Infrastructure and platform services grew the fastest at 50 percent, followed by hybrid cloud management software at 41 percent.

The market for the management of hybrid clouds is much smaller than the other segments, but Synergy noted that it’s increasingly important for enterprises looking to make public cloud services work seamlessly with their internal IT assets.

Enterprise software-as-a-service (SaaS) and public cloud infrastructure both grew 30 percent year-on-year, with hosted private cloud infrastructure services up 29 percent.

Synergy noted that spending on cloud services first surpassed spending on hardware and software used to build public and private clouds in 2016, with the gap widening dramatically in 2017 and 2018.

Cloud providers took in $150bn last year in revenues from cloud infrastructure services alone, including infrastructure-as-a-service, platform-as-a-service and hosted private cloud services.

Nine firms dominate spending

That compares with $100bn in total spending on hardware and software used to build cloud infrastructure, split roughly evenly between public and private clouds, though public cloud spending grew more rapidly.

Spending on cloud services grew at a much more rapid clip than spending on the software and hardware used to build clouds, Synergy said.

Cloud providers booming services revenues were due in part to their infrastructure investments, Synergy noted.

It found that Microsoft, Amazon AWS, Dell EMC and IBM dominated cloud spending across services, hardware and software in 2018, followed by Salesforce, Cisco, HPE, Adobe and VMware.

The nine companies accounted for well over half of all cloud-related revenues, Synergy found.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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