The cloud pavilion of Amazon Web Services at the 2016 CeBIT tech fair in Hanover, Germany Sean Gallup/Getty Images
The cloud pavilion of Amazon Web Services at the 2016 CeBIT tech fair in Hanover, Germany

Cloud Market Forecast to Hit $200B by 2020

With cloud providers IBM, Microsoft, and Google releasing their quarterly financials within the week, and Amazon soon to follow, the folks at Synergy Research Group have polished their crystal ball in order to determine where it’s all going. They predict good fortune for those in the cloud business, as well as for developers of software that runs in the cloud. The news isn’t quite so stellar for those selling hardware and software to private enterprise data centers, however.

In a report released Monday, Synergy said it expects worldwide revenues from cloud and SaaS services to grow at an average annual rate of 23-29 percent over the next five years and pass the $200 billion mark in 2020. This will come alongside an 11 percent annual growth in sales of infrastructure to hyperscale cloud providers.

Public clouds will see the strongest growth, with an average gain of 29 percent annually, followed by managed or hosted private cloud services at 26 percent and enterprise SaaS at 23 percent. APAC will be the highest growth region, followed by EMEA and North America. The highest growth areas will be databases and IoT-oriented IaaS/PaaS service.

“As cloud markets reach a massive scale, growth rates will inevitably tail off, but our latest forecasts are still showing that over the next five years we will still see some really robust growth,” John Dinsdale, Synergy’s chief analyst and research director, said in a statement. “As cloud continues to dramatically reshape the IT world, it is also clear that the hyperscale phenomenon continues to dramatically reshape cloud. Hyperscale operators are diminishing the growth opportunity for traditional non-hyperscale service providers and are also seriously challenging the technology vendor community to rethink its position in the new world.”

The one downside will be in the sales of hardware and software to traditional enterprise data centers, which will continue to decline slowly. That market is expected to shrink by about 2 percent per year as workloads shift from privately owned infrastructure to the public cloud.

In an April report on first quarter data, Synergy reported that cloud infrastructure service revenues — including IaaS, PaaS and hosted private cloud services — were nearly $10 billion with a growth rate of more than 40 percent. Although Amazon Web Services held the lead, Microsoft, Google, IBM, Alibaba and Oracle all had Q1 cloud revenue growth rates that were higher than that of AWS.

Although Microsoft, Google and Alibaba all achieved Q1 annual growth rates of 80% or more, Amazon isn’t likely to lose its lead any time soon. In April it commanded 33 percent of the global cloud infrastructure market, with revenues comfortably larger than the combined total of its five closet competitors.

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