Worldwide IaaS revenue exceeds $100bn for first time

Research by Gartner shows IaaS public cloud services revenue grew 30 per cent in 2022

The worldwide infrastructure as a service (IaaS) market grew 29.7 per cent in 2022, exceeding the $100bn mark for the first time.

Revenue from IaaS public cloud services reached $120.3bn (£91.96bn) last year, up from $92.8bn (£70.94bn) in 2021, according to research firm Gartner.

Amazon retained the number one position in the IaaS market in 2022, followed by Microsoft, Alibaba, Google and Huawei.

"Cloud has been elevated from a technology disruptor to a business disruptor," said Sid Nag, VP analyst at Gartner.

"IaaS is driving software-as-a-service (SaaS) and platform-as-a-service (PaaS) growth as buyers to continue to add more applications to the cloud and modernize existing ones."

Nag explained that IaaS growth in 2022 was stronger than expected, despite a slight softening in the fourth quarter as customers focused on using their previously committed capacity to its fullest potential.

"This is expected to continue until mid-2023 and is a natural outcome of the market's maturity. We expect an acceleration in 2024, as there is still room for plenty of additional future growth," he continued.

Gartner had already predicted this year that public cloud services would be nearing the $600bn (£458.58bn) revenue mark in 2023.

A report earlier this month by IDC also saw public cloud services on a steep growth incline with the market reaching $545.8bn (£427.88bn) in 2022.

IDC reported IaaS was the second largest revenue category with 21.2 per cent of the total.

Top performers

In 2022, the top five IaaS providers accounted for over 80 per cent of the market.

Amazon continued to lead the worldwide IaaS market with revenue of $48.1bn (£36.76bn) and 40 per cent market share.

Microsoft followed in the number two position with 21.5 per cent share, reaching over $25bn (£19.11bn) in IaaS public cloud revenue in 2022.

Microsoft's software-first strategy continued to support its IaaS growth as customers required more cloud capacity to support automation, advanced analytics and digital workplace capabilities.

Alibaba Group held its number three position with 7.7 per cent market share, although it generated modest growth of 2.4 per cent year over year.

While Alibaba continued to lead the IaaS market in China, its limited potential for expansion across global markets has slowed growth, driving its recent decision to spin off its Alibaba Cloud business into a separate entity.

Google saw the highest growth rate of the top five IaaS vendors, growing 41 per cent in 2022 to reach over $9bn (£6.88bn) in revenue.

Google's increased investment in sovereign cloud and expanded sales and marketing partner programs helped to broaden its customer base and drive additional IaaS revenue, according to Gartner.

Huawei rounded out the top five IaaS vendors with 4.4 per cent market share and $5.2bn (£3.97bn) in revenue for 2022.

Since its 2020 pivot to an increased focus on cloud, Huawei has been steadily growing its IaaS revenue in China and emerging markets.

"Generative AI will continue to drive the cloud market forward, particularly as hyperscalers look to support offerings beyond the existing, democratized generative AI solutions," said Nag.

"As enterprises integrate generative AI into their technology portfolio, new markets and opportunities for cloud hyperscalers will emerge related to sovereignty, ethics, privacy and sustainability."