The cloud infrastructure as a service market is in a state of upheaval, according to leading analyst firm Gartner, who is urging buyers to be cautious when choosing providers as the competitive landscape shifts.
Gartner says many service providers are shifting their strategies after failing to gain enough market traction.
Global spending on IaaS is expected to reach almost US$16.5 billion in 2015, an increase of 32.8% from 2014, with a compound annual growth rate from 2014 to 2019 forecast at 29.1% , according to Gartner's latest forecast.
The IaaS solution ecosystem is rapidly consolidating around a small number of market leaders, Gartner vice president Lydia Leong said at the Gartner Infrastructure, Operations and Data Centre Summit in Sydney.
"The sky is not falling — customers are getting great value out of cloud IaaS — but the competitive landscape is shifting," she says. "Few providers have the financial resources to invest in being broadly competitive in the cloud IaaS market."
Brutal Competitive Dynamics
Gartner says 2014 was a year of reckoning for many cloud IaaS providers, and many believe that their current strategy is failing them.
The analyst firm says some providers intend to launch an entirely new cloud IaaS platform, make substantial changes to their current platform or move to providing managed services on leading cloud IaaS platforms.
Many providers have indicated that they intend to discontinue or significantly reduce their investment in their cloud IaaS offerings, and others intend to eliminate or replace them.
"We urge buyers to be extremely cautious when selecting providers; ask specific and detailed questions about the provider's roadmap for the service, and seek contractual commitments that do not permit the provider to modify substantially or to discontinue the offering without at least 12 months' notice," Leong says.
Market share has continued to become more heavily concentrated, even while the market has grown dramatically, Gartner says. Although 15 providers featured in Gartner's new “Magic Quadrant for Cloud Infrastructure as a Service, Worldwide," the market is dominated by only a few global providers — most notably Amazon Web Services, but increasingly also Microsoft Azure and Google Compute Engine.
Between them, these three providers comprise the majority of workloads running in public cloud IaaS in 2015.
IaaS Workloads Expand
In 2014, the absolute growth of public cloud IaaS workloads surpassed the growth of on-premises workloads (of any type) for the first time, according to Gartner. The firm’s 2015 CIO survey indicates that 83% of CIOs consider cloud IaaS as an infrastructure option, and 10% are already cloud-first with cloud IaaS as their default infrastructure choice.
Cloud IaaS is now used for virtually all use cases that can be reasonably hosted on virtualised x86-based servers.
Gartner says the most common use cases for cloud IaaS are development and testing environments; high-performance computing and batch processing; internet-facing websites and Web-based applications; and nonmission-critical internal business applications. The company says an increasing number of organisations now also run mission-critical business applications on cloud IaaS.
"Cloud IaaS can now be used to run most workloads, although not every provider can run every type of workload well," says Leong. "Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost and business terms.
“Although in theory, cloud IaaS has very little lock-in, in truth, cloud IaaS is not merely a matter of hardware rental, but an entire data centre ecosystem as a service,” she continues. “The more you use its management capabilities, the more value you will receive from the offering, but the more you will be tied to that particular service offering."