SaaS and IaaS continue to drive $260bn public cloud industry

Public cloud services and the companies that provide them are in rude health, according to a new industry study, with the worldwide market worth more than $260 billion (£197 billion) in 2017.

Worldwide revenue from public cloud services is slated to grow by 18.5 per cent on levels recorded in 2016, where the market was worth $219.6 billion, according to the latest industry analysis from Gartner Inc.

Sid Nag, research director at the firm, says that SaaS revenue has been one of the key drivers of this growth.
He explained: “Final data for 2016 shows that software as a service (SaaS) revenue was far greater in 2016 than expected, reaching $48.2 billion. SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public cloud revenue forecast.”

Gartner predict that this growth will reach a year-on-year increase of 21 per cent, and say that this acceleration is increasing thanks to SaaS providers increasingly migrating all application functional extensions and addons as a service.

Platform-as-a-service (PaaS) services are also becoming many organisations’ primary development platforms, the report says.

Cloud system infrastructure services, also known as IaaS, are also projected to grow by a third (36.6 per cent) to be worth $34.7 billion in 2017.

All in all, the public cloud industry is exceeding Gartner’s initial forecasts, but the research firm is predicting a sustained rate of growth given the increasingly mainstream status of search services and the maturation of the industry.

However, the report also says that, through to 2021, 70 per cent of public cloud services are due to be controlled by the top 10 public cloud providers.

Nag said: “In the IaaS segment, Amazon, Microsoft and Alibaba have already taken strong positions in the market.

“In the SaaS and PaaS segments, we are seeing cloud’s impact driving major software vendors such as Oracle, SAP and Microsoft from on-premises, licence-based software to cloud subscription models.”