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2018 public cloud revenue to surge 21.4% - but then it 'will stabilise’

17 Apr 2018

Public cloud will continue its rapid growth in 2018 but according to Gartner there could be a tunnel coming to take the light.

The worldwide public services market is projected to grow 21.4 percent this year to reach US$186.4 billion, up from $153.5 billion last year.

However, despite public cloud revenue growing more strongly than initially forecast, Gartner still expects growth rates to stabilise from 2018 onward. This, according to Gartner, is due to the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.

Within the public cloud market, the fastest growing segment is cloud system infrastructure services (infrastructure as a service or IaaS), which Gartner has forecast to soar 35.9 percent in 2018 to reach $40.8 billion.

The big players in the IaaS market are expected to to tighten their stranglehold to account for nearly 70 percent of the market by 2021, up from 50 percent in 2016.

"The increasing dominance of the hyperscale IaaS providers creates both enormous opportunities and challenges for end users and other market participants," says Gartner research director Sid Nag.

"While it enables efficiencies and cost benefits, organisations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market. In response to multicloud adoption trends, organisations will increasingly demand a simpler way to move workloads, applications and data across cloud providers' IaaS offerings without penalties."

While it’s not the fastest growing, Software as a Service (SaaS) is still the largest segment of the cloud market with revenue expected to grow 22.2 percent this year to reach $73.6 billion. Furthermore, Gartner expects SaaS to account for 45 percent of total application software spending by 2021.

"In many areas, SaaS has become the preferred delivery model," says Nag.

"Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes."

Looking into the platform as a service (PaaS) category, the segment showing the most growth is database platform as a service (dbPaaS) which is expected to reach almost $10 billion by 2021. While it is quite the obscure acronym, Gartner asserts hyperscale cloud providers are increasing the range of services they offer to include dbPaaS.

"Although these large vendors have different strengths, and customers generally feel comfortable that they will be able to meet their current and future needs, other dbPaaS offerings may be good choices for organisations looking to avoid lock-in," says Nag.

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