Market Insight

RESEARCH NOTE - Meta-Cloud Era Commences; Off-Premises Cloud Services Market Hits $57B in H1 2016

October 18, 2016

Clifford Grossner Clifford Grossner Senior Research Director – Cloud & Virtualization, IHS Markit
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Following is information and insight from IHS Markit about our H2 2016 Cloud Services for IT Infrastructure and Applications Biannual Market Tracker, which includes data for the half-year ended June 30, 2016. 

Highlights

  • The meta-cloud discussion has intensified over the last six months, seizing center stage from hybrid cloud as the next phase of cloud services
  • Worldwide revenue for off-premises cloud services—including software as a service (SaaS), infrastructure as a service (IaaS), cloud as a service (CaaS) and platform as a service (PaaS)—reached $57 billion in the first half of 2016 (H1 2016)
  • SaaS is currently the number-one off-premises cloud service, representing 44 percent of revenue in H1 2016; however, CaaS and PaaS have the highest compound annual growth rates (CAGRs) through 2020

Our Analysis

Looking to increase business agility and reduce costs, enterprises are turning to off-premises cloud services—to the tune of nearly $286 billion by 2020, a five-year (2015–2020) CAGR of 25 percent.

Portions of this market are more mature while others are still emerging. Off-premises cloud services that provide complete applications, colocation and hosting have been available for many years, and new services that deliver on-demand and agile computing, such as those offering software containers, are still emerging. Consolidation in the IaaS segment is underway. Leaders in this space have been established and late entrants will need to consider strategic options, from divestiture to specialized offerings that cater to specific verticals.

Since we published the last edition of this report in April 2016, the buzz around meta-cloud has amplified. Starting now and through 2019, the hybrid cloud architecture is anticipated to give way to a distributed architecture, creating meta-clouds. In these meta-clouds, enterprises will consume services from multiple cloud service providers (CSPs), driving additional cost and performance optimizations. The emergence of a wholesale market for cloud infrastructure is also anticipated.

The drive to leverage machine learning and artificial intelligence (AI) capabilities integrated with enterprise and mobile applications continues to mushroom—with new services available from Microsoft, SAP and Salesforce, coupled with the expansion of existing offers from Amazon, Google and IBM. Most noteworthy is the deployment of specialized silicon for processing machine learning and AI algorithms by Google (Tensor), and we expect to see more specialized silicon developed and deployed in the next 24 months.

Cloud Services Report Synopsis

The biannual IHS Markit cloud services report provides market size, vendor market share, forecasts, analysis and trends for off-premises cloud services including cloud as a service (CaaS), infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). It also tracks paid SaaS subscriber licenses.

For information about purchasing this report, contact the sales department at IHS Markit in the Americas at (844) 301-7334 or AmericasLeads@ihsmarkit.com; in Europe, Middle East and Africa (EMEA) at +44 1344 328 300 or technology_emea@ihsmarkit.com; or Asia-Pacific (APAC) at +604 291 3600 or technology_APAC@ihsmarkit.com.

Geography
Global
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