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Hyperscalers Take Cloud Market Share from Telcos, Tier 2 CSPs

Meanwhile, telcos and cloud giants are increasingly collaborating at the edge.

Hyperscalers, to no-one’s surprise, are steadily gaining cloud services market share.

Together, hyperscale cloud platforms had 35 percent of all off-premises cloud services revenue in 2019, according to Omdia, up 11 percentage points from 2016.

Meanwhile, Tier 2 cloud service providers, who had nearly 60 percent of the market in 2016, had 50 percent market share in 2019.

Telcos, the third major category of cloud service provider, had 15 percent market share instead of 18 in 2016.

Omdia expects revenue for the overall cloud services market to grow 29 percent year-over-year from 2019 to 2020 and have a five-year compound average growth rate (CAGR) of 16 percent from 2019 to 2024.

Hyperscale cloud providers will undoubtedly lead the charge in terms of revenue growth over this time, Devan Adams, principal analyst at Omdia, wrote in a research note.

offprem cloud market share by segment omdia 2020.png

Off-premises cloud service revenue by market segment

Subscribe to Omdia’s recently updated Cloud & Colocation Services for IT Infrastructure and Applications Tracker for more

Still competing to an extent with each other over cloud market share, hyperscalers and telcos have been striking partnerships around 5G and edge buildouts.

AWS, Microsoft Azure, Google Cloud, IBM, AT&T, Telefónica, Orange, and Verizon established strategic partnerships to address growing customer needs at the edge:

  • AWS and Verizon collaborated to provide 5G mobile edge computing (MEC) in locations across the US.
  • Google Cloud partnered with Telefónica to offer MEC in Spain.
  • Google Cloud and Orange cooperated on cloud, edge computing, and cybersecurity services in Europe.
  • IBM Cloud worked with AT&T to enable the management of applications in hybrid cloud environments.
  • Microsoft took Azure to the stars with its release of Azure Space services.

Omdia expects the period starting in 2023 to be the edge evolution phase, during which all hyperscalers and most telcos and Tier 2 cloud providers will accelerate release of edge services as customer cloud spend grows.

The research organization defines “edge” as locations with 20 milliseconds maximum network roundtrip time to the end-user device.

That phase will also see developers create more open-source applications designed for use at edge data centers.

TAGS: Cloud
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