Cloud Native Applications Market Size, Share & Trends Analysis Report By Component (Platform, Service), By Deployment Mode (Public Cloud, Private Cloud, Hybrid Cloud), By End-User (BFSI, IT and Telecom, Retail and E-commerce, Healthcare, Government, Manufacturing, Others), By Enterprise Size (Large Enterprise, Small and Medium-sized Enterprise) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global cloud-native applications market size was valued at USD 5.9 billion in 2022 and is projected to reach a value of USD 47.9 billion by 2031, registering a CAGR of 26.2% during the forecast period (2023-2031). The growing demand for apps that allow for easy scaleout and hardware decoupling is a primary element driving the cloud-native applications market share.

Cloud-native applications are software applications designed expressly for use in cloud settings. These apps exploit the Cloud's scalability, flexibility, and distributed nature. The creation and deployment of cloud-native applications entails a set of methods and technologies that allow businesses to reap the benefits of cloud computing.

The increased usage of IoT devices and data security and privacy requirements drive the growth of the cloud-native applications market. On the other hand, inconsistency in IoT standards for interoperability limits market growth to some level. Furthermore, the surge in cloud-based device use will likely give attractive prospects for cloud-native applications market prediction.

Market Dynamics

Global Cloud Native Applications Market Drivers:

Digital Transformation Initiative

Organizations worldwide are aggressively pursuing digital transformation efforts to update their business processes, increase efficiency, and remain competitive in today's business market. The use of digital technologies to improve operations, customer experiences, and overall business models is referred to as digital transformation. To serve the changing needs of businesses, digital transformation necessitates adaptable and scalable IT infrastructures. With their microservices design and containerization, cloud-native apps provide the flexibility and scalability required for dynamic digital contexts. In the United States, the Digital Transformation Agenda (DTA) intends to promote digital collaboration in three areas: digital economy and infrastructure, human capital development, and creating an enabling environment. The DTA has pledged more than $800 million in funding. Similarly, the Digital Government Strategy asks US government agencies to create a digital government that provides superior digital services to Americans.

In software development and deployment, digital transformation stresses agility and speed. For example, Continuous integration and delivery (CI/CD) provide speedier development cycles and shorter time-to-market for new features and updates. Furthermore, cloud-native applications enable businesses to develop quickly and adapt to changing market conditions. They make trying out new features and technologies easier, aligning with the inventive parts of digital transformation. Traditional banking systems are transforming into cloud-native architectures for greater agility and reactivity. Real-time transaction processing, tailored customer experiences, and seamless integration with new financial technology are all possible with cloud-native banking applications. The cloud-native applications market trend continues to rise as organizations across industries embrace digital transformation, driven by the demand for flexibility, agility, and innovation in the fast-evolving digital ecosystem.

Global Cloud Native Applications Market Restraints:

Security Concerns

Organizations deploying cloud-native applications continue to prioritize security. Microservices' dispersed and networked structure, combined with the use of containers, creates new security challenges. Data breaches and cybersecurity threats represent serious concerns in cloud-native environments. Attackers may take advantage of vulnerabilities in microservices or containers, allowing them to get unauthorized access to sensitive data. A data breach occurred in 2020 at Docker Hub, a popular container registry service, exposing sensitive data of around 190,000 users. This event brought to light the security risks associated with containerized settings.

Security flaws in cloud-native apps can lead to noncompliance with regulatory standards, particularly in healthcare (HIPAA) and finance (PCI DSS). According to the "2021 Cloud Security Report" from Cybersecurity Insiders, 77% of firms questioned indicated an increase in cyber-attacks, with misconfiguration of cloud platforms and insufficient access restrictions being major factors. The financial industry is subject to severe rules governing the security of client financial data. Any security flaw in a cloud-native application used for financial services could result in serious legal ramifications.

According to Gartner, by 2025, 99% of cloud security failures will be the client's fault, emphasizing the importance of enterprises investing in security education, tools, and procedures to prevent risks. Security concerns are also mentioned as a major impediment to cloud adoption. According to a Statista poll conducted in 2021, 32% of respondents listed security and compliance as the major barriers to cloud adoption.

Global Cloud Native Applications Market Opportunity:

Rapid Adoption of Hybrid and Multi-Cloud Strategies

Adopting hybrid and multi-cloud methods has become a strategic need for enterprises seeking flexibility, resilience, and cost-cutting capabilities. This development creates numerous opportunities for cloud-native app suppliers. Cloud-native application providers may create solutions that run seamlessly across different cloud environments, meeting the diverse needs of enterprises implementing multi-cloud strategies. Kubernetes, an open-source container orchestration platform, enables enterprises to uniformly deploy and manage applications across on-premises data centers and cloud providers. Offering tools and services that improve interoperability among cloud providers allows enterprises to switch providers more simply.

According to Flexera research on the State of the Cloud, 93% of organizations have a multi-cloud strategy, demonstrating the broad acceptance of multi-cloud approaches. In addition, according to Cisco research from 2022, 80% of enterprises have chosen a hybrid cloud architecture. According to a 2022 poll, 82% of IT leaders have chosen hybrid cloud architectures. In addition, an IDG Communications survey discovered that enterprises use hybrid and multi-cloud solutions to boost reliability (54%), data security (50%), and performance (45%). According to the same poll, 53% of respondents felt that using various cloud providers provides flexibility and choice, emphasizing the desire for vendor variety.

Cloud-native application vendors may leverage the potential afforded by the rising use of hybrid and multi-cloud strategies by designing their solutions to be interoperable across many cloud environments. Supporting industry standards, integrating with popular cloud services, and providing tools for easy migration and operation across varied cloud landscapes are all part of this.

Regional Analysis

The global cloud-native applications market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America Dominates the Global Market

North America is the most significant global cloud-native applications market shareholder and is estimated to grow at a CAGR of 26.4% over the forecast period. North America will dominate the cloud-native apps market, owing to an increase in the number of IoT applications hosted on the Cloud and increased investments in emerging technologies such as big data, social media, and mobility. More than 80% of organizations polled in the United States are investing or planning to invest in emerging technologies, including smart analytics (99%), process automation (100%), hybrid Cloud (97%), and cybersecurity (100%). Along with many other cutting-edge technologies, North America has the most developed edge and Cloud computing infrastructure. Cloud computing and increased degrees of digitalization have been visible throughout the region. Thanks to public and private deployment possibilities, IT investment in system infrastructure is shifting substantially away from traditional solutions and into the Cloud. Businesses are quickly adopting cloud services for new initiatives or to replace aging systems. 

Furthermore, the Canadian market accounted for the biggest revenue share due to a huge supply of skilled specialists. Furthermore, end-use companies in this region are heavily investing in staff upskilling, which has a positive impact. As a result, adoption and market revenue are increasing in this country. 

Asia-Pacific is anticipated to exhibit a CAGR of 26.8% over the forecast period. Asia-Pacific is expected to grow fastest due to the transformation of IT and telecommunications with the increasing adoption and growth of advanced technology such as cloud computing, data analytics, AI, and IoT, which drives the demand for cloud-native applications in the Asia-Pacific region. Asia accounts for 42 percent of AI-strong patents and 48 percent of global startup investment in AI technology. In terms of IoT, the area holds 39% of global strong patents and 56% of global startup investment in IoT technology.

In addition, the Japanese market had the highest revenue share due to major investments in developing product services. Furthermore, growing consumer knowledge of the various benefits of cloud-native platforms, such as increased productivity, infrastructure flexibility, rapid scalability, lower operational costs, and others, is considerably contributing to market revenue growth in this country.

Europe's market accounted for the third-largest revenue share in cloud-native applications, and market insights predict that in 2022. The growing need for cloud-native platforms in IT, retail, and e-commerce drives market revenue growth. Furthermore, many European government agencies heavily invest in cloud computing projects to boost the adoption of cloud solutions. These regions' countries have a significant demand for hybrid cloud solutions.

Segmental Analysis

The global cloud-native applications market is segmented based on component, enterprise size, deployment mode, end-user, and region.

The market is further segmented by component into Platform and Service.

The platform holds the major market share.

Platform

A platform in software development could refer to the underlying environment or framework that facilitates application development, testing, and deployment. Tools, libraries, and runtime environments may be included. The platform segment dominates the global cloud-native apps market because of its critical role in cloud-native development, faster development and deployment, increased scalability and flexibility, and cost-effectiveness. Cloud-native platforms provide the infrastructure and tools to build, deploy, and manage cloud-native applications. Container orchestration technologies, Kubernetes, and serverless computing frameworks are significant components of these platforms.

Service

Specific functions or applications created on top of the IoT platform to address specific use cases, such as device management, predictive maintenance, or real-time monitoring, may be included in IoT services. AWS IoT Core offers services for managing and engaging with Internet of Things devices. AWS IoT Analytics, built on top of AWS IoT Core, provides advanced analytics for IoT data.

The market is sub-segmented into public, private, and hybrid clouds based on deployment mode.

Public Cloud occupies the maximum share of the market.

Public Cloud

Hosting applications and services on cloud infrastructure owned and maintained by a third-party provider constitutes public cloud deployment. Several organizations share resources such as servers and storage. The underlying infrastructure, including servers, networks, and storage, is managed by public cloud providers, reducing the need for enterprises to invest in and operate their technology. This decreases the complexity and burden of IT operations, freeing up resources for enterprises to focus on essential business activities.

Hybrid Cloud

A hybrid cloud deployment combines both public and private cloud infrastructures. It enables them to share data and apps. This allows for increased flexibility and resource optimization. During peak demand, resources might be expanded onto the public Cloud. It also allows for the easy transfer of apps and data between environments.

The market can be further bifurcated by enterprise size into large, small, and medium enterprises.

Large Enterprise is a significant contributor to the market.

Large Enterprise

large enterprises are businesses with a high scope of operations, extensive resources, and many people. These companies frequently operate on a worldwide scale and have complicated organizational structures. Large enterprises were among the first to embrace cloud-native technologies, realizing their potential to change their IT infrastructure and application development processes. Because of their early adoption, they get a good start in establishing knowledge, adopting cloud-native platforms, and developing cloud-native apps. They may also form strategic alliances with large technology vendors to implement and manage innovative technologies.

Small and Medium-sized Enterprise

Small and medium-sized organizations (SMEs) have fewer employees and, in general, fewer resources than huge corporations. Startups, small enterprises, and mid-sized firms are all examples of SMEs. SMEs often have smaller budgets than major corporations. MEs are frequently more agile and adaptable to market changes. SMEs emphasize cost-effective, value-for-money solutions. For SMEs, solutions allowing scalability as the firm grows are critical.

Based on end-users, the market is fragmented into BFSI, IT and Telecom, Retail and E-commerce, Healthcare, Government, and Manufacturing.

BFSI influenced the market growth.

BFSI

Financial institutions, banks, insurance companies, and other financial service providers are all part of the BFSI sector. It is a highly regulated sector that places a high priority on security and data protection. The financial services industry is subject to strict regulatory obligations and data security concerns. Cloud-native applications provide increased security, data encryption, and compliance capabilities, making them ideal for the BFSI industry. Taking advantage of digital technology for online banking, mobile payments, and financial analytics. Because of its emphasis on regulatory compliance, data security, digital transformation, innovation, and legacy system modernization, the BFSI industry dominates the cloud-native apps market. 

IT and Telecom

Companies in the IT and Telecom industry operate in information technology, software development, telecommunications, and networking. For example, cloud computing services for scalable infrastructure, 5G technologies, and enterprise resource planning (ERP) software solutions.

Recent Developments

• September 2023- Amazon and Anthropic announced a collaborative partnership to enhance generative AI.
• November 2023- SAP SE (NYSE: SAP) and Amazon Web Services Inc. (AWS), a wholly owned subsidiary of Amazon.com Inc. (NASDAQ: AMZN), announced that SAP HANA Cloud now supports AWS Graviton processors.