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Spending on public cloud services to reach US$160b in 2019

28 Feb 2019

Spending on public cloud services and infrastructure in aggregate is set to reach US$210 billion this year, with the public cloud services the real driver.

That’s according to IDC’s Worldwide Semiannual Public Cloud Services Spending Guide, which forecasts spending to increase 23.8 percent from 2018.

Although annual spending growth is expected to slow slightly over the 2017-2022 forecast period, the market is forecast to achieve a five-year compound annual growth rate (CAGR) of 22.5% with public cloud services spending reaching $370 billion in 2022.

"Most organisations have adopted the public cloud as a cost-effective platform for hosting enterprise applications and for developing and deploying customer-facing solutions," says IDC Customer Insights and Analysis program director Eileen Smith.

"Over the next five years, IDC believes that cloud platforms and ecosystems will serve as the launchpad for an explosion in the scale and pace of digital innovation. The result will be 'multiplied innovation' with as many new applications deployed in the cloud as prior generations deployed over the previous four decades."

Three industries – professional services, discrete manufacturing, and banking – will each spend more than $20 billion on public cloud services this year, accounting for more than one-third of the worldwide total.

The process manufacturing and retail industries will round out the top five with spending of more than $15 billion each. These will remain the top five industries in 2022 due to their continued investment in public cloud solutions.

The industries that will see the fastest spending growth over the five-year forecast period are professional services (26.4% CAGR), retail (24.0% CAGR), and personal and consumer services (24.0% CAGR).

The largest category of cloud computing will be Software-as-a-Service (SaaS), claiming more than half of all public cloud spending in 2019. Comprising of applications and system infrastructure software (SIS), SaaS will be dominated by applications purchases. The leading SaaS applications will be enterprise resource management (ERM) and customer relationship management (CRM), followed by content workflow and management applications and collaborative applications.

Infrastructure as a Service (IaaS) will be the second largest category of public cloud spending in 2019, followed by Platform as a Service (PaaS). IaaS spending, comprised of servers and storage devices, will be the fastest growing category of cloud spending with a five-year CAGR of 33.7%. PaaS spending will be the second-fastest growing category (29.8% CAGR) led by purchases of data management software application platforms, integration and orchestration middleware, and data access, analysis and delivery applications.

In terms of location, the United States will claim the largest piece of the market with spending forecast to reach $124.6 billion in 2019. In a distant second place will be China with $10.5 billion, closely followed by the United Kingdom with $10 billion, Germany with $9.5 billion, and Japan with $9.5 billion.

Of these, China will experience the fastest growth in public cloud services spending over the five-year forecast period (44.9% CAGR).

Very large businesses (more than 1000 employees) will account for more than half of all public cloud spending this year, while medium-size businesses (100-499 employees) will deliver another 20% of the worldwide total. Small businesses (10-99 employees) will edge out large businesses (500-999 employees) for the third position.

With the exception of the very large business category, all the other company size categories, including small office (1-9 employees) will experience public cloud spending growth greater than the 22.5% CAGR of the overall market.