Public Cloud Panorama: Synergy Breaks Down Multibillion Dollar Market

From Above And Below

If you look broadly at the entire segment of the IT industry that touches public cloud technologies, you can sort the various business types into five general buckets.

The first two are businesses that supply public cloud operators -- IT hardware and software for building clouds, and colocation facilities for operators who'd rather lease data center infrastructure. Together, those businesses grossed $10 billion in the second quarter.

Then there's the downstream side -- public services delivered on cloud platforms. That includes IaaS, PaaS and private clouds built on top of those environments in one bucket, SaaS in its own bucket and, finally, Internet Services, ranging from e-commerce platforms to social networks in a third. Together, they made $12 billion in the second quarter.

Synergy Research compiled and culled the data for a bird's-eye view of this market that saw $22 billion in revenue in the second quarter of 2015.

Building Blocks For Public Cloud

This includes all the infrastructure -- hardware and software -- that goes into building a public cloud.

It now accounts for almost a quarter of the total data center infrastructure spend with $7 billion in second-quarter revenue and growth of 26 percent year over year.

The IT vendors leading this category are Cisco, Hewlett-Packard, Dell and IBM, according to John Dinsdale, Synergy's chief analyst.

While Cisco, with its networking dominance, remains the leader when it comes to supplying equipment to operators building public clouds specifically, it's worth noting that HP, in this last quarter, pulled ahead of Cisco in the overall cloud infrastructure equipment market (including private corporate clouds) after years in second place.

Colocation Resources For Public Cloud

Some build their clouds from the requisite parts -- others lease the equipment from a public data center. It was a $2.8 billion market in the second quarter with 9 percent year-over-year growth.

Cloud vendors are driving ever more business to colocation operators. Public cloud operators and associated digital content companies account for 47 percent of the data center colocation sales.

According to first-quarter data compiled by Synergy, data center giant Equinix is in command with a 9.5 percent market share through its retail colocation business.

The next competitor, Digital Realty, has just over 6 percent share, almost exclusively as a wholesale business in which it leases entire data centers.

NTT, the Japanese telecom giant, controls just over 4 percent of the colo market, almost entirely retail. Two telecoms follow: Verizon and CenturyLink.

Consolidation is the big story in colocation -- Equinix, Digital Realty and NTT are all navigating major acquisitions.

Public Cloud As Infrastructure

This category includes Infrastructure-as-a-Service and Platform-as-a-Service providers, as well as private and hybrid clouds built atop those public platforms.

It's a sector that grew nearly 50 percent last year -- compared to 5 percent overall IT growth -- and raked in $5.5 billion in the second quarter.

The undisputed, uncontested leader in this space remains Amazon Web Services. Microsoft, IBM and Google trail with their own services. Together, those four brought in aggregated revenues of more than $3 billion in the quarter.

The world's four largest cloud infrastructure providers boosted their combined market dominance last quarter among their ranks, seizing control of more than half the overall market, according to Synergy.

Public Cloud As Software

The Software-as-a-Service sector grew 29 percent year over year in the second quarter with $6.6 billion in sales, according to Synergy.

The leader of the SaaS market remains CRM giant Salesforce.

Microsoft, Google and SAP trailed in the cloud-delivered software marketplace. Envy of the market leader might have motivated Microsoft to make an ultimately rejected bid on Salesforce in May.

Public Cloud As Internet Service

Many public clouds are built to deliver a broad variety of Internet services. Those services are varied: search, social networking, email and other web platforms -- technologies that generate massive revenue streams.

The largest vendor in this category is Google, thanks to its dominance with its flagship search product.

Behind Google in this market is Tencent Holdings, the Chinese conglomerate that owns social networks, web portals and all sorts of Internet properties. Social behemoth Facebook and Baidu, a Chinese web services company, follow.

There's also a substantial e-commerce component that fits in this category.

Leading that market is Amazon (the online retail division, not the cloud provider)., the Chinese electronics giant, then eBay and Alibaba Group round out the top four, according to Dinsdale.