The public cloud services market experienced substantial growth in 2022, reaching a total worldwide revenue of $545.8 billion, representing a significant increase of 22.9% compared to the previous year, according to a new study.
These figures were revealed in the latest data from the International Data Corporation (IDC) Worldwide Semiannual Public Cloud Services Tracker.
IDC Report Reveals Continued Cloud Growth
Software as a Service – Applications (SaaS – Applications) maintained its position as the primary source of revenue in the public cloud services market, contributing over 45% of the total revenue in 2022.
Infrastructure as a Service (IaaS) followed closely as the second largest revenue category, accounting for 21.2% of the overall revenue. Platform as a Service (PaaS) and Software as a Service – System Infrastructure Software (SaaS – SIS) captured 17.0% and 16.7% of the revenue respectively.
The top five public cloud service providers, namely Microsoft, Amazon Web Services, Salesforce Inc., Google, and Oracle, consolidated their dominance in 2022, capturing more than 41% of the global revenue and achieving a year-over-year growth rate of 27.3%. Microsoft maintained its leading position in the overall public cloud services market, holding a 16.8% share in 2022, followed by Amazon Web Services with a 13.5% share, the study showed.
While the overall public cloud services market witnessed a growth rate of 22.9% in 2022, the revenue for foundational cloud services, which support digital-first strategies, experienced an even more impressive growth rate of 28.8%.
This highlights the increasing reliance of enterprises on cloud innovation platforms that offer widely deployed compute services, data/AI services, and app framework services, driving innovation within organizations, according to the study’s authors. IDC predicts that spending on foundational cloud services, particularly IaaS and PaaS elements, will continue to grow at a higher rate than the overall cloud market as businesses accelerate their digital transformation initiatives.
Worldwide Public Cloud Report: Additional Commentary
Rick Villars, the group vice president of Worldwide Research, IDC, commented on the findings:
“Given the economic challenges of the past year, it's easy to conclude that we are in a period where a focus on constraining new expenditures and optimizing the use of existing cloud assets will dominate CIOs' priorities and shape the fortunes of IT providers for the next several years. It's also a very wrong conclusion. The assessment and use of AI, triggered by generative AI, is starting to dominate the planning and long term investment agendas of businesses and cloud providers will play a significant role in the evaluation and adoption of AI enablement services.”
Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services, said:
"Cloud providers are making significant investments in high-performance infrastructure. This serves two purposes. First, it unlocks the next wave of migration for enterprise applications that have previously remained on-premises. Second, it creates the foundation for new AI software that can be quickly deployed at scale. In both cases, these investments are resulting in market growth opportunities."
Lara Greden, research director, Platform as a Service, IDC, added:
"IDC research shows that most organizations rank their public cloud provider as their most strategic technology partner, with general agreement among IT leaders and business leaders. When it comes to planning for PaaS developer and data services, organizations that haven’t yet begun their journeys in developing AI-enabled applications are beginning to prioritize them. Those that have started to adopt AI are finding themselves well positioned to evaluate further adoption of generative AI capabilities in an intelligent app-strategy."
Frank Della Rosa, research vice president, SaaS, Business Platforms, and Industry Cloud at IDC, said:
"SaaS – Applications remain the largest segment of the more than $547 billion cloud software market forecast by the end of 2023. Changing market conditions, exponential increases in cloud spend, and rapid cadence of supplier innovation help sustain double-digital growth. The next generation of SaaS applications will leverage advances in AI to deliver unprecedented performance improvements in personalization and customer experience, and operational efficiency while redefining functional markets across industries."
