Market Monitor, a service of 451 Research, projects that cloud market revenue will increase at a 36% compound annual growth rate (CAGR), putting the cloud computing market just shy of $20 billion at the end of 2016.  

The recently published Cloud as-a-Service overview report provides current market size and five-year growth rates for the infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and infrastructure software-as-a-service (SaaS) segments; a competitive landscape analysis for each category; and forecasts for revenue generated by 309 cloud-services providers and technology vendors across 14 sectors.

Leveraging 451 Research's deep insight into established cloud vendors and startups, Market Monitor employs a pure bottom-up approach, with active participation from sector analysts. The resulting forecast incorporates the unique traits, strengths and weaknesses of each market participant, and when used with in-depth qualitative research from 451 Research, Market Monitor provides a deep, holistic view of the cloud computing marketplace.

"Cloud computing is on the upswing and demand for public cloud services remains strong," stated Yulitza Peraza, analyst, Quantitative Services, 451 Research and coauthor of the report. "However, public cloud adoption continues to face hurdles including security concerns, transparency and trust issues, workload readiness and internal non-IT-related organizational issues."

Additional report highlights include:

• IaaS accounted for the majority of total market revenue in 2012, with more than half of the total public cloud market share, and a 37% CAGR through 2016.
• The PaaS layer accounted for nearly a quarter (24%) of the total public cloud revenue in 2012, and will experience the fastest growth — a projected CAGR of 41% between 2012 and 2016. 
• The infrastructure SaaS sector, which does not include enterprise SaaS revenue, represented 25% of total cloud revenue in 2012 and is expected to generate a 29% CAGR through 2016.
• Publicly traded companies comprise 23% of the cloud vendors tracked, and generate 78% of the total revenue. The majority of vendors are still below the $5 million revenue threshold; vendors that constitute the cloud 'midmarket' (between $5 million and $50 million in revenue) accounted for 25% of total revenue in 2012.  
• Only a dozen vendors generated more than $75 million each in revenue in 2012.
• 83% of all services provider generated $15 million or less each in 2012 revenue.

"Several vendors currently included in the cloud 'midmarket' are titans in their core IT sectors," said Greg Zwakman, research director, Quantitative Services, 451 Research. "It is still early days for the cloud divisions at these vendors, and running the same revenue distribution analysis against our 2016 forecasts paints a different picture."