The worldwide public cloud services market is projected to grow 21.4% in 2018 to total $186.4 billion, up from $153.5 billion in 2017, according to Gartner, Inc.
The fastest-growing segment of the market is cloud system infrastructure services (infrastructure as a service or IaaS), which is forecast to grow 35.9% in 2018 to reach $40.8 billion (see Table 1).
Gartner expects the top 10 providers to account for nearly 70% of the IaaS market by 2021, up from 50% in 2016.
"The increasing dominance of the hyperscale IaaS providers creates both enormous opportunities and challenges for endusers and other market participants," said Sid Nag, research director, Gartner.
"While it enables efficiencies and cost benefits, organizations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market. In response to multicloud adoption trends, organizations will increasingly demand a simpler way to move workloads, applications and data across cloud providers' IaaS offerings without penalties."
Software as a service (SaaS) remains the largest segment of the cloud market, with revenue expected to grow 22.2% to reach $73.6 billion in 2018. Gartner expects SaaS to reach 45% of total application software spending by 2021.
"In many areas, SaaS has become the preferred delivery model," said Mr. Nag. "Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes."
Within the platform as a service (PaaS) category, the fastest-growing segment is database platform as a service (dbPaaS), expected to reach almost $10 billion by 2021. Hyperscale cloud providers are increasing the range of services they offer to include dbPaaS.
"Although these large vendors have different strengths, and customers generally feel comfortable that they will be able to meet their current and future needs, other dbPaaS offerings may be good choices for organizations looking to avoid lock-in," said Mr. Nag.
Although public cloud revenue is growing more strongly than initially forecast, Gartner still expects growth rates to stabilize from 2018 onward, reflecting the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.
This forecast excludes cloud advertising, which was removed from Gartner's public cloud service forecast segments in 2017.
Gartner clients can read more in the reports "Forecast Analysis: Public Cloud Services, Worldwide, 4Q17 Update" and "Forecast: Public Cloud Services, Worldwide, 2015-2021, 4Q17 Update." Complimentary research and webinars are available at the Gartner Cloud Hub.
Gartner analysts will provide additional analysis on data center and IT operations trends at the Gartner global IT Infrastructure & Operations events April 3-4 in Sao Paulo, April 25-27 in Tokyo, April 30-May 1 in Sydney, May 8-9 in Mumbai, May 15-17 in Orlando, June 5-6 in Frankfurt, and June 26-27 in Mexico City.