Revenue from IaaS Public Cloud Services Increased by 16.2% Globally
As organizations continue to leverage the benefits of scalability, flexibility, and cost-effectiveness, the IaaS market is poised for further expansion in the coming years.
The worldwide Infrastructure as a Service (IaaS) market experienced a robust growth of 16.2% in 2023, reaching a total of $140 billion. This marks an increase from $120 billion in 2022, as reported by Gartner, Inc.
“Cloud technologies continue to be a major business disruptor, due in part to the focus on hyper scalers looking to support offerings related to sovereignty, ethics, privacy and sustainability,” said Sid Nag, VP Analyst at Gartner. “This should continue to drive exponential growth into the future with these offerings being spurred by generative AI (GenAI) investments for 2024 and beyond.”
Amazon Leads the IaaS Market
Amazon retained its position as the top player in the IaaS market in 2023. It was followed closely by other major providers, including Microsoft, Google, Alibaba, and Huawei, solidifying their dominance in this rapidly growing sector.
Dominance of the Top Five Providers
In 2023, the top five IaaS providers—Amazon, Microsoft, Google, Alibaba, and Huawei—accounted for a commanding 82% of the market. Amazon led the pack with impressive revenue of $54.6 billion, securing a 39% market share. Microsoft followed with a 23% share, further establishing its strong presence in the market.
Google's Significant Growth
Google made notable strides in 2023, achieving a growth rate of 26.3%. This growth propelled Google into the third position, capturing an 8.2% share of the market. Alibaba maintained its stronghold as the fourth-largest provider with a 7.9% market share.
“As the top hyper scalers continue to grow their IaaS offerings in the shadow of GenAI, we should also see other areas, such as software-as-a-service (SaaS) and platform-as-a-service (PaaS), grow as well. IaaS is the tide that lifts all boats,” said Nag.
The Impact of Generative AI
Generative AI (GenAI) is beginning to influence the growth of cloud markets. However, the AI-driven growth in 2023 remained relatively modest, suggesting that its full impact on the market may unfold in the coming years.
“Cloud is the foundational and scalable substrate required to make GenAI a reality. The segments that are beginning to see the impacts of GenAI include IaaS, where AI model training is consuming IaaS resources, and SaaS where GenAI capabilities are beginning to be included in SaaS applications,” said Nag. “Capacity demand in public cloud markets has already increased sharply as a result and will continue to do so through 2028. In the near term, AI-driven revenue growth will be small relative to the overall public cloud market.”
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