Public Cloud Growth Set to Explode

Cloud migration continues to be a priority for many industries and businesses. According to a new study from Synergy Research Group, the public cloud ecosystem has gained a significant boost—showing a 26% jump in revenue for Q1 2022 compared to 2021—thanks to this increased interest. As 2022 adds billions in revenue to the ecosystem, 2022 is shaping up to be a pivotal point for cloud service providers.

Iaas and PaaS lead the way in public cloud growth

Infrastructure-as-a-service (IaaS) and Platform-as-a-Service (PaaS) companies are the biggest recipients of this outpouring of funds. At $44 billion, they’ve experienced year over year growth of 36%. In contrast, the private market—SaaS and other private cloud options—experienced only a 21% growth over the same time period.

To clarify:

• IaaS: The provider supplies on-demand access to computing resources, and businesses run their own applications within this host infrastructure.
• PaaS: The provider supplies the cloud environment for businesses to develop, host, and manage desired applications with supplied tools for testing and development.
• SaaS: The provider gives businesses access to their tools through an API. Businesses process their data through the provider’s tools.

One big driver for public cloud adoption is lower costs, followed by more straightforward utilization. Public cloud services have been highly competitive in their services while building the infrastructure businesses need to deploy only what they need and when. On the other hand, the private cloud still requires companies to develop and maintain their own servers to meet any demand spikes.

Security is yet another reason businesses are taking advantage of the public cloud. Instead of shouldering cybersecurity and maintenance alone, companies can share the cost of security upgrades with others on the same public cloud servers. This means security features are often more up to date.

Within the ecosystem, public cloud providers increased spending by 20%, focusing on building, leasing, and equipping their data center infrastructure. These actions help companies better meet the demands of businesses operating in the cloud or on the brink of migration.

Hyperscale data centers are a significant focus

The study notes that public cloud markets typically grow anywhere from 15% to 40% per year. Over the next five years, growth is expected to slow as more companies make the transition but even then, the group expects a 10 to 30% growth rate.

Building an ever larger footprint of hyper-scale data centers might continue to drive this growth. In turn, growth would greatly expand available processing power and speed for companies grappling with the data explosion. 

Hyperscale data centers are also uniquely positioned to match the agile needs of the composable business. It’s not just scale that differentiates but their composition; a focus on modularity and automation could be particularly attractive to potential customers and thus help drive new growth even as the market becomes more massive.

The US leads the public cloud market for now

According to the survey results, US-based companies lead the market, with businesses in China coming in a not-so-close second. In Q1 alone, it accounted for 44% of all cloud service revenues and 51% of hyperscale data center capacity. In comparison, China accounted for 8% of cloud service revenue and 15% of hyperscale data center capacity.

A different study from Gartner notes that SaaS still makes up the largest segment of the public cloud ecosystem. Still, the explosive growth of IaaS and PaaS could see those segments quickly overtake it. Companies can make strategic decisions by adopting services that closely align with business goals. 

Many CIOs, tech leaders, and decision-makers are calling for a shift in thinking when it comes to the public cloud. Cloud adoption is an enabler for business initiatives rather than an end goal in itself. This shift in thinking could allow the market to continue to grow at this rate.

The public cloud’s growth could open new opportunities

Big cloud providers such as Amazon, Microsoft, and Google are also driving growth with no clear winners just yet. This can sometimes make it a challenge to see exactly where the ecosystem is headed. It also creates significant competition for smaller service providers attempting to enter the market. 

Experts at Synergy Research Group note that any that brings products companies need to market at just the right time will be able to navigate the growing public cloud ecosystem and make their mark. As our need for data processing grows, this could also be a time of new innovation as service providers across the board compete to take part. 

This is good news for companies because a growing public cloud ecosystem will provide more choices and better performance. Market dominance from a few familiar names will probably not go away. However, a growing market does open the door to new companies and offerings on the horizon. The study from Synergy notes those familiar names, but we’re excited to see what happens in this growing market.