Spending on cloud infrastructure services increased by nearly a third (32%) during the final quarter of last year to reach $39.9bn as customers continued to invest in Infrastructure-as-a-Service (IaaS (opens in new tab)) and Platform-as-a-Service (PaaS (opens in new tab)) according to new research from Canalys.
This increase in cloud spending was driven by high demand for cloud computing services (opens in new tab) to support remote work and distance learning as well as by organizations' digital transformation (opens in new tab) efforts. Throughout the whole of last year, cloud infrastructure services spending grew by 33 percent to reach $142bn which is up from $107bn in spending during 2019.
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Research analyst at Canalys Blake Murray explained why cloud spending saw a significant increase during Q4 of 2020 in a press release (opens in new tab), saying:
“The rate of digitalization, led by cloud, is gathering pace. Companies are now more confident about releasing budgets for business transformation. Large projects that were postponed earlier in the year are being re-prioritized, led by application modernization, SAP migrations and workplace transformation. Healthcare, financial services and pharmaceuticals are among the industries leading the way, but even those under most pressure are diverting investments to cloud, opening up new revenue streams and diversifying business models.”
AWS and Microsoft lead the way
Amazon's cloud computing division AWS (opens in new tab) retained its top spot as the leading cloud service provider in the fourth quarter of last year, accounting for 31 percent of total spend. The company also saw a resurgence in customer investment that helped fuel 28 percent year on year growth during Q4.
Meanwhile Microsoft Azure (opens in new tab) saw its growth rate increase by 50 percent to boost its market share in the global cloud services market to 20 percent. At the same time, strong demand for the software giant's other products running on Azure including Teams (opens in new tab) and Windows Virtual Desktop also increased during the pandemic.
Google Cloud (opens in new tab) was the third largest cloud service provider with a seven percent share of the global cloud services market and its business grew by 58 percent during the fourth quarter of 2020. Chinese cloud computing giant Alibaba Cloud (opens in new tab) accounted for six percent of the total market and also saw strong growth of 54 percent during Q4.
As vaccine rollouts are being delayed and many employees are still working from home (opens in new tab), expect demand for cloud services to continue to grow in 2021.
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Via Canalys (opens in new tab)