Businesses today are relying on cloud-based services more than ever before. Since that transition happened rather quickly, it should be no surprise that the cloud infrastructure industry had a big year in 2020. According to data from Synergy Research Group, it was worth $129 billion.
That marks a significant increase from 2019 when cloud infrastructure revenues totaled just $97 billion. The 33 percent jump was largely driven by the COVID-19 pandemic. However, experts believe that it will be sustainable for the foreseeable future.
Now that companies have made the jump to cloud technologies, there is no point in going back to the old way of doing things. That should allow the cloud infrastructure industry to post another strong year in 2021.
Major Players Leading the Way
It should come as no surprise that the cloud infrastructure industry was once again led by a handful of key players. Amazon’s AWS segment leads all by a wide margin while Microsoft and Google round out the top three respectively. Last year was particularly noteworthy for Alibaba as it overtook IBM to claim the fourth spot.
Together, those five companies make up more than 70 percent of the industry. Other firms, like Oracle, Tencent, and Salesforce are all vying for a remarkably small piece of the pie.
It’s also worth noting that this gap continues to widen. The major industry players have increased their control of the market without cannibalizing each other’s positions. For the most part, growth by companies like Microsoft and Google has correlated with a decrease in market control by the “other” businesses.
Over the past four years, these smaller firms have lost a collective 13 percent of the market share. That’s bad news for everyone but the five giants currently leading in the space.
Even so, the sheer size of the cloud infrastructure market means that there is still room for smaller companies to thrive. Synergy’s chief analyst, John Dinsdale, says, “Amazon and Microsoft tend to overshadow the market, with Amazon’s share staying at well over 30 percent and Microsoft growing its share from 10 percent to 20 percent over 16 quarters.”
He adds, “However, after excluding those two, the rest of the market is still growing by over 30 percent per year, pointing to growth opportunities for many of the smaller cloud providers.”
Fourth Quarter Spike
Many people assume that most of the cloud infrastructure industry’s growth came near the start of 2020. After all, that’s when companies had to start shifting their operations online due to COVID-19.
Although the industry did get a boost around March and April, it also ended the year on a high note. Dinsdale notes, “2020 ended with a bang for the cloud market, as the sequential jump of $4 billion from Q3 easily set a new record for cloud providers’ incremental revenue growth.”
To that end, the industry tallied revenues of just over $37 billion in the frame. Along with topping the third quarter, that figure also represents a 35 percent increase over the fourth quarter of 2019.
It will be interesting to see what the cloud infrastructure space has in store to start 2021. Keep an eye on the industry as companies continue to push their operations online.