New data from Synergy Research Group shows that Q3 spending on cloud infrastructure services was over $68 billion worldwide, up by $10.5 billion from the third quarter of last year and up 18% year-on-year. It’s the fifth successive quarter in which the cloud market grew by $10-11 billion from the previous year.
► Cloud infrastructure service revenues for the quarter were $257 billion
► Market predicted to stay buoyant for several years
Synergy said that Q3 was broadly in line with the previous two quarters. It noted that while the current economic and political climate has held back some growth in cloud spending, there is clear evidence that generative AI technology and services are starting to help. Q3 spending was up by 5% from Q2, substantially higher than the quarter-on-quarter growth rate seen in the previous two quarters.
Excluding the seasonal peaks always seen in Q4, the sequential growth in cloud spending was the highest it has been since 2021. The three leaders accounted for 66% of the worldwide market. Google and Microsoft had the stronger year-on-year growth, with their Q3 worldwide market shares being 23% and 11% respectively. AWS stayed within its long-standing market share band of 32-34%. Among the tier two cloud providers, those with the highest year-on-year growth rates included Oracle and VMware.
Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $68.1 billion, with trailing 12-month revenues reaching $257 billion. Public IaaS and PaaS services account for the bulk of the market and grew 19% in Q3. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three control 72% of the market.
While the law of large numbers continues to exert downward pressure on cloud market growth rates, AI is giving the market a boost. There are signs that many enterprises are through their period of belt tightening and of optimising rather than growing their cloud operations. AI is helping to open up a wide range of new cloud workloads. Synergy fully expects future cloud growth rates to remain buoyant over the coming years.
