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AWS, Microsoft, Alibaba Led IaaS Cloud Services In 2020: Gartner

‘The era of CIOs investing in cloud IaaS and platform as a service (PaaS) discretely is long over,’ says Sid Nag, Gartner’s research vice president.

Amazon Web Services, Microsoft and Alibaba were tops among infrastructure-as-a-service (IaaS) providers in 2020, as the global IaaS public cloud services market increased 40.7 percent, according to a new report Monday from research and advisory firm Gartner.

The worldwide IaaS market grew to $64.3 billion last year – up from $45.7 billion in 2019, with AWS remaining the largest provider, followed by Microsoft, Alibaba, Google Cloud and Huawei. Those five companies accounted for 80 percent of the market, Gartner said.

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 organizations relating to data sovereignty, workload portability and network latency, according to Sid Nag, Gartner’s research vice president.

“This fact, coupled with reliance on the public cloud by a majority of organizations during the pandemic, drove another year of double-digit market growth in 2020,” Nag said. “The era of CIOs investing in cloud IaaS and platform as a service (PaaS) discretely is long over. 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 (artificial intelligence), as CIOs look to invest in technologies that address their complex and emerging use cases.”

While AWS’ IaaS cloud services revenue grew 28.7 percent to $26.2 billion as the overall size of the market increased, its percentage share of the IaaS market fell to 40.8 percent from 44.6 percent in 2019, according to Gartner.

Microsoft held onto the No. 2 spot with IaaS revenue that climbed 59.12 percent to $12.7 billion, accounting for 19.7 percent of the market, up from 17.4 percent in 2019. The global coronavirus pandemic and move to remote work increased demand from existing Microsoft Azure cloud customers to move their mission-critical workloads, such as healthcare applications with artificial-intelligence-assisted bots, digital twins in manufacturing and e-commerce in retail, to the cloud.

Third-place Alibaba, the largest IaaS cloud services provider in Asia, saw its IaaS revenue jump 52.8 percent to $6.1 billion. The Chinese vendor’s overall market share moved to 9.5 percent from 8.8 percent. It highest growth rate – 105 percent – came in the education vertical, driven by downloads of DingTalk, its enterprise communication and collaboration platform, by employees and students working and studying from home.

Google Cloud finished fourth. Its IaaS revenue climbed 66.1 percent to $3.9 billion, while its market share moved to 6.1 percent from 5.2 percent in 2019. Google Cloud’s focus on industry verticals under CEO Thomas Kurian is paying off, with retail, government and healthcare sector spending helping drive its growth in IaaS, along with its focus on a hybrid and multi-cloud strategy.

China’s Huawei rounded out the top five with a 202.8 percent increase in IaaS revenue to $2.7 billion, as its market share surged to 4.2 percent from 1.9 percent in 2019. It was Huawei’s first appearance in the top 5 list and its second consecutive year of exceeding 200 percent IaaS market growth. More than 90 percent of Huawei’s revenue comes from Greater China, as the region continues to see rapid cloud market growth, according to Gartner.

“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,” Nag said.

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