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IaaS market on the rise, fuelled by surging hybrid cloud demand

14 May 2019

The strong market demand for cloud Infrastructure-as-a-Service (IaaS) is expected to fuel the US$45.6 billion market toward $150.7 billion by 2023 – at a compound annual growth rate of 27 percent.

That’s according to analysis from Frost & Sullivan, as the research giant asserts enterprises are using the cloud for strategic benefits such as supporting digital transformation rather than for tactical ones, such as reducing IT infrastructure costs and hardware/software maintenance burden.

This has ultimately changed the way enterprises choose and manage their infrastructure, and led them to deploy applications across multiple infrastructures, from on-premises to cloud (multi- and single-tenant), resulting in higher demand for IaaS.

“As the mix of deployment models and best-of-breed cloud IaaS vendors becomes increasingly diverse, single-tenant IaaS will gain revenue share over multi-tenant services,” says Frost & Sullivan cloud computing senior analyst Maiara Munhoz.

“Meanwhile, the emergence of cloud brokerage and cloud management platforms is boosting the trend of hybrid and multi-cloud, making managed cloud services providers key in supporting enterprises. Managed service providers (MSPs) will support companies with workload assessment and placement, workload migration, and hybrid cloud integration.”

The analysis is broken down into multi-tenant and single-tenant cloud services, geographic regions (North America, Europe and the Middle East, Asia-Pacific, and Latin America) and by global market share.

“The competitive landscape of the global cloud IaaS market is concentrated between the top two providers, AWS and Microsoft, which now control 74% of the global market share," says Munhoz.

“North America continues to be the strongest IaaS market globally, followed by EMEA, but they are expected to gradually make room for APAC and LATAM. Some countries in APAC, like Japan and Australia, are more mature, while India, mainland China, Singapore, South Korea, and Hong Kong are fast-growing markets.”

Moving forward, Frost & Sullivan it will be essential for cloud IaaS vendors to invest in integrated services, on-premises and in the cloud. For further growth opportunities, vendors need to:

  • Offer more advanced services in the cloud—such as containers and serverless architecture—and tools for enterprises to manage, analyze, and act on their data.
  • Support hybrid deployment models, as enterprises realise that a single cloud or deployment model will not address all their application requirements.
  • Partner with MSPs and deliver training, programs and features to support them.
  • Invest in educating clients on the technology, as enterprises still need guidance on how to use the cloud to meet goals for innovation and digital transformation.
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