• Cloud infrastructure services investments are defying the current economic climate, finds Synergy Research Group
• Global cloud infrastructure services spending grew by 18% year on year to $68.1bn
• Investments in generative AI are fuelling enterprise spending on cloud infrastructure
• AWS is still the clear market leader but Microsoft and Google boast highest year-on-year growth stats

Recent investments in generative AI technology by cloud providers boosted enterprise spending in cloud infrastructure services in the third quarter of 2023, fueling year-on-year growth of 18% to take the value of the sector to $68.1bn, according to market analysis by Synergy Research Group, which noted that the total spent on cloud services in the 12 months to the end of September was $257bn. 

The research house gathered the data from all the major players in the cloud infrastructure services sector – which comprises infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and hosted private cloud services – following the recent earnings reports from the hyperscaler giants, the most recent of which came from Amazon last Thursday. Its cloud division, Amazon Web Services (AWS), is the long-time cloud infrastructure services market leader and, as the market share chart above shows, it retains a commanding lead with a market share of 32%. AWS reported third-quarter revenues of $23.1bn, up by 12% year on year.

Despite the negative global economic and political climate, which is hitting many other sectors and many individual companies hard, the cloud services sector is in rude health. The $68.1bn total for the third quarter was up by $10.5bn from the same period a year earlier: The Synergy Research team noted that this is the fifth consecutive quarter in which the market has grown year on year by between $10bn and $11bn.

While general market conditions may have suppressed some cloud spending, “there is clear evidence that generative AI technology and services are starting to help overcome” any market headwinds. “We are now starting to see a stabilisation of growth rates, as cloud provider investments in generative AI technology help to further boost enterprise spending on cloud services. It is still early days for generative AI, but the technology will help to keep cloud growth buoyant over the coming years… Helped by AI, 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,” according to the Synergy Research team.

Geographically, the cloud services market is growing strongly in all regions of the world: When measured in local currencies, the Asia Pacific region had the strongest growth, with India, China, Australia and Japan all growing by 20% or more year on year, the team found.        

And while AWS is still the clear market leader, Google (with a 23% market share) and Microsoft (11% share) had the stronger year-on-year growth numbers among the major players, with Microsoft increasing its worldwide market share by almost two percentage points from the third quarter of 2022. Between them, the three leaders accounted for two-thirds of the worldwide market in the third quarter. After the top three, Alibaba is the next largest global player, with a 4% market share. 

Among the tier-two cloud providers, those with the highest year-on-year growth rates include Oracle, Snowflake, MongoDB, VMware, Huawei and China Telecom, according to the research firm.

- Ray Le Maistre, Editorial Director, TelecomTV