Market Overview

The global cloud computing market was valued at USD 210 billion in 2019 and is estimated to grow at a CAGR of 16.9% during the forecast period, 2020–2027.

The adoption of multi-cloud strategies by consumers is set to engender a positive trend for cloud computing. Cloud computing technology has been experiencing a golden era from the past few years, gaining traction across all the commercial sectors. Businesses around the world are focusing on the adoption of cloud services for lowering infrastructure costs and enhancing operational flexibility.

Intense competition exists in the market, with Amazon, Microsoft, and Google operating at the forefront. In the competitive scenario, Amazon dominates the market with close to a 50–60% share globally, which has compelled other players (Microsoft and Google) to devise dynamic solutions, such as Microsoft Azure and Google Cloud Platform, for gaining a competitive edge in the market. Since then, these companies have been firmly operating with innovation in cloud offerings.

In light of such innovative and trustworthy tools, there is a rise of multi-cloud adoption, which has paved the way for companies to migrate, manage, and monitor data across multiple clouds. Companies following these strategies have also gained significant advantages in terms of application reliability and reduced cost and leverage the best services that each vendor provides. For instance, Snap Inc., one of the primary camera and social media companies in the U.S., successfully integrated this strategy in its business model and achieved a price reduction in its hosting segment from USD 0.72 to USD 0.69 in the first quarter of 2018. Additionally, the survey results published by RightScale in 2018 also portray that around 80% of the respondents opted for a multi-cloud strategy globally.

One of the striking factors behind this colossal adoption is the growing use of microservices that primarily form a snippet of code connected together to develop comprehensive applications. Microservices primarily highlight the growth of multi-cloud factor, owing to their less resource-intensive and portable nature. Thus, with the growing significance of cloud computing, coupled with the latest developments, the scope of innovation widens within the market prospects, enhancing market growth in a longer run.

Segmentation Overview

By Model

Based on model, the market is segmented into Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Among these, the SaaS model dominated the market with a share of 60–65% in 2019. The present market scenario for SaaS depicts an increase in adoption rate as a result of the changing dynamics of B2B, the emergence of state-of-the-art products, increasing awareness pertaining to its benefits, and the pressing need to gain a competitive advantage.

The model is considered as an attractive option of investment, specifically for private equity firms that are focused on investing access funds due to the changing tax regulations scenarios across the globe on account of its lean cost structure and high customer lifetime values.

On account of the ability to achieve higher efficiency and flexibility on both financial and technical parameters, companies are seen to be increasingly adopting the SaaS model in their management and operations. Additionally, as per our analysis, close to 85–90% of business organizations will be utilizing public cloud IaaS and PaaS by integrating them by the end of 2026.

The launch of AWS’s DocumentDB in January 2019 is one of the examples that depict companies focusing on increasing the ease of using one service or platform for multiple purposes. A customer-centric approach from SaaS service providers will result in higher customer success rates, simultaneously improving retention rates.

By Deployment

Based on deployment, the market is segmented into public, private, and hybrid, of which the hybrid segment is expected to register the fastest CAGR of 19.5% during the forecast period, 2020–2027. An IBM research study reveals that businesses gain a competitive advantage via the hybrid cloud as it offers organizations greater control of \ data, enhanced application performance, and efficiencies while helping centralize IT management.

By Application

Based on application, the market is segmented into database management, business analytics, storage backup and recovery, application development and testing, integration and orchestration, content management, and others. The business analytics segment is expected to observe the highest CAGR of 20.8% during the forecast period, 2020–2027.

In light of the emergence of the algorithm economy, cloud competitors are competing fiercely to attain advanced analytical capabilities in order to provide valuable insights for corporate companies. Cloud analytics are expected to disrupt the competitive landscape of the manufacturing and service industries in the coming years. Companies, including Ingram Micro, General Electric, FedEx Corporation, and UPS, are adopting cloud analytics to gain business insights and transform business models accordingly. Significant vendors of cloud-based analytics platforms include IBM, Google, SAS, Microsoft, and Salesforce.

Regional Overview

Globally, North America dominated the market with a total share of around 63–65% in 2019. The U.S. dominates the regional market in terms of value share, while Canada is estimated to observe tremendous growth with a CAGR of 20.04% during the forecast period, 2020–2027. Cloud adoption in Canada has been gaining traction in the past few years with the entrance of key cloud companies. Canadians are demanding IT-enabled government services, which has endorsed the adoption of cloud services in the country. The Canadian government is supporting the momentum with emerging cyber trends by shifting toward cloud-based technologies.

The government’s cloud adoption strategy reduces the gap between the supply and demand for cloud services and delivers a constant approach for managing the risks of cloud adoption. Cloud adoption is rapidly gaining pace in Canada with positive government initiatives. The below figure portrays the Canada cloud computing market based on application.

Brazil is expected to record the fastest CAGR of 15.8% in South America during the forecast period, 2020–2027. Small- and medium-sized businesses in Brazil create considerable growth opportunities for the market. Moreover, the financial sector in the country also invests in cloud services. In 2018, the National Monetary Council approved resolution 4568/18, which establishes that all financial institutions in the country have cybersecurity policies. In addition, the new standard regulates the usage of cloud computing in the financial sector, which further provides the freedom to store data outside Brazil as long as the Central Bank's access to information is already guaranteed under contractual terms.

In 2019, IBM announced the expansion of its global cloud footprint, and the company plans to launch a new IBM Cloud Multizone Region (MZR) in Brazil by late 2020. This is considered as the company’s first MZR in South America, which will help clients in the region deploy mission-critical workloads and applications across hybrid cloud environments.

Within Europe, the Nordic countries are expected to emerge as a lucrative site for various cloud investors with the fastest CAGR of 18.2% during the forecast period, 2020–2027. The Nordic countries, including Denmark, Finland, Sweden, and others, form a mature market for cloud computing. Cloud computing technology is already in use in the manufacturing sector, owing to BYOD (Bring Your Own Device) and analytics trends. Vendors in these countries have diversified cloud services, which blend private, public, and hybrid clouds in complex and business-critical areas. As per VMware, the public cloud is considered as the most preferred deployment model in these countries.

Competitive Landscape

Adobe, Alibaba, AWS, CenturyLink, Fujitsu, Google, IBM, Microsoft, NTT Communication, Oracle, Rackspace, SAP, Verizon, and Vmware are a few of the key players identified in the market.

Amazon Web Services (AWS) has an extensive geographical presence with a broad customer base globally. This strong geographical presence enables the company to eliminate the risk associated with dependency on a particular region. It has its operations across Asia-Pacific, the Americas, and Europe Middle East and Africa (EMEA). The company has data centers globally to serve its services efficiently and reach a wide customer base.

AWS serves its services to various industries, including automotive, financial services, gaming, manufacturing, robotics, healthcare, life science, educational, government, and non-profit organizations. It also undertakes various partnerships that help in serving domestic as well as international markets. Thus, the company will help in raising its revenue as well as creating a long-term opportunity.

Alphabet Inc., the parent company of Google LLC, is strongly focused on investing in R&D activities in order to produce new products and services to meet customer expectations. The company actively invests in the cloud, advertising, machine learning, and search. It also invests in data centers, real estate and facilities, and information technology infrastructure to expand its expertise in engineering and other functional areas. This enables the company to target customers across all segments. Furthermore, the company has a strong geographical presence across North America, South America, Europe, and Asia-Pacific, which enables it to target customers globally and generate higher revenue.

Cloud Computing Market Segmentation

By Model

• IaaS
• PaaS
• SaaS

By Deployment

• Public
• Private
• Hybrid

By Application

• Database management
• Business analytics
• Storage backup and recovery
• Application development and testing
• Integration and orchestration
• Content management
• Others

By Industry Vertical

• IT and telecom
• BFSI
• Manufacturing
• Government and public sector
• Retail and consumer goods
• Healthcare
• Energy and utilities
• Media and entertainment

By Region

• North America
• Europe
• Asia-Pacific
• South America
• The Middle East and Africa