As global businesses continue to realize the benefits of cloud computing in the fast-paced digital economy, the market demand for public cloud services is skyrocketing.
“Cloud is expanding far beyond niche e-commerce and online ad-sponsored searches. Enterprises talked about cloud journeys of up to ten years. Now they are looking to complete the shift in less than half that time,” said Rick Villars, Group Vice President, Worldwide Research at IDC.
According to the IDC Worldwide Semi-annual Public Cloud Services Tracker, the global public cloud services market size reached an astonishing USD 233.4 billion in 2019, up by 26% from 2018.
The market growth can be attributed to the increased demand for cloud applications and platforms, including software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and platform-as-a-service (PaaS).
Based on the product category, SaaS remains the most lucrative segment of the public cloud services market, with revenues increasing from USD 123.9 billion in 2018 to USD 148.5 billion in 2019. Though SaaS witnessed 19.8% year-on-year revenue growth, its market share was dropped from 66.9% in 2018 to 63.6% in 2019.
Meanwhile, IaaS and PaaS have witnessed significant growth in terms of market share and revenues.
Global Public Cloud Services Market at a Glance:
| Segment | 2019(Revenue) | 2018(Revenue) | 2019(Market Share) | 2018(Market Share) | Y-o-Y Growth |
| SaaS | 148.5 | 123.9 | 63.6% | 66.9% | 19.8% |
| IaaS | 49 | 35.4 | 21.0 | 19.1% | 38.4% |
| PaaS | 35.9 | 25.8 | 15.4% | 14.0% | 38.8% |
| Total | 233.4 | 184.2 | 100% | 100% | 26% |
According to the IDC, the global public cloud services market size has increased more than 2X times since 2016 and continued to consolidate in 2019.
AWS, the clear leader in cloud infrastructure, crossed the USD 10 billion revenue mark again in the second quarter of 2020, while Google Cloud broke the USD 3 billion mark.
But, in terms of SaaS, Salesforce stood first with around 7.8% of the public cloud service market share, followed by Microsoft, SAP, Oracle, and Google.
For IaaS and PaaS combined, AWS led the market with 33.6% of the market share, followed by Microsoft, Google, Alibaba, and IBM.
For infrastructure alone, AWS accounted for 45% of the market share, leading Microsoft (17.9%), Alibaba (9.1%), and Google (5.3%), according to Gartner.
Public Cloud Services Market Shares, 2019:
| Market Players | IaaS + PaaS | Market Players | SaaS |
| AWS | 33.6% | Salesforce | 7.8% |
| Microsoft | 18.0% | Microsoft | 7.4% |
| 4.9% | SAP | 4.1% | |
| Alibaba | 4.6% | Oracle | 3.7% |
| IBM | 4.1 | 3.1% | |
| Rest of Market | 34.9% | Rest of Market | 73.9% |
According to the IDC, the combined spending on IaaS and PaaS has nearly tripled since 2016. This shows the increasing reliance on cloud infrastructure and platforms for application deployment.
Moreover, the spending on IaaS and PaaS is expected to grow at a rate higher than the overall cloud services market over the next several years, with the increasing demand for resilience, flexibility, and agility.
“Today’s economic uncertainty draws fresh attention to the core benefits of IaaS – low financial commitment, flexibility to support business agility, and operational resilience,” said Deepak Mohan, Research Director, Cloud Infrastructure Services.
“The COVID-19 disruption has accelerated cloud adoption with both traditional enterprise IT organizations and digital service providers increasing use of IaaS for their technology platforms,” he added.
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“Modern application platforms powered by containers and the serverless approach provide the necessary tools for developers in meeting these needs. The growth in PaaS revenue reflects the need by enterprises for tools to accelerate and automate the development lifecycle,” said Larry Carvalho, Research Director, Platform as a Service.