Cloud Revenues at $544 Billion in 2022

A new report from Synergy Research says the 2022 infrastructure revenues for cloud stood at $237 billion with cloud services adding another $307 billion to this number. Of this, the top three cloud providers accounted for 65% of the global market, a scenario that continued into the first quarter of 2023 as well. 

During this period, AWS took away 32% of the market followed by 23% for Microsoft Azure and 10% for Google Cloud Platform. The next twenty providers on this list carved out about 26% of the remaining with the likes of Oracle, Snowflake, MongoDB, Huawei and a few Chinese telecom service providers getting high growth rates. 

The report also noted that the so-called hyperscalers faced competition from other participants such as Alibaba, Cisco, Adobe, Dell, Huawei, IBM, Oracle, SAP and VMWare that were quietly carving out their own space within the public cloud. Based on this growth, Synergy notes that the public cloud ecosystem revenues would double by 2026. 

Cloud revenues will double, so will data centers

Which might explain why the hyperscalers and several of their competitors are moving fast to set up data centers and leasing colocation services across the world. The report said this doubling of public cloud revenues would cause hyperscale data centers to grow by at least 50% over the next three years. Even if this growth takes place, colocation providers too would be in demand as public cloud presence expands into emerging markets, it says. 

The report says that quarterly revenues for cloud infrastructure services rose from $15 billion to $63 billion, with Amazon leading the way. During this period, the company has kept its market share to around one-third of the total with revenues growing between 30 to 40%. However, this growth rate might have since peaked following newer entrants joining the fray. 

The big-three are seeing lower growth rates

Over the past few quarters, the report said that AWS growth rates have settled around 20 to 25% growth with Azure and Google also experiencing similar rates. One reason could be the sharp spike in energy costs as well as the inflationary pressures that the world saw over the past twelve months that led to a slowing down on cloud spends. 

Then there is also the expansion of the cloud market across the world where regional players are coming to the fore by offering to store data locally. Currently, the US rules the market with almost 45% of all cloud services revenues in 2022 coming from the region from 53% of the global hyperscale data center capacity.

Data privacy, sustainability challenges to growth

The focus now is slowly shifting to countries that potentially have the highest GDP growth rates and sound telecom networks. And this is where the challenge lies as the hyperscalers currently operate out of only 17 countries which amounts to cloud locations totalling 56% of global GDP.  The research report notes that hyperscalers currently operate in over 100 distinct regions and that number is going to expand to 130 by the end of 2023.

There is also the question of compliance and regulatory pressure and governance issues with some countries where data privacy laws could well restrict data from leaving their borders. This would force the hyperscalers to move into newer regions to overcome the compliance challenge and also reduce the latency-related issues that continue to plague the cloud. 

And finally, there is also the sustainability issue that could play a crucial role in the growth of the hyperscalers. The issue of net-zero emissions would result in more pressure from regulators, corporate entities, data center customers and eco groups for reduction in power consumption as a means to sustainability. 

Therefore, it would be yet another race between the hyperscalers, the challengers and the rest of the field to make quick and fast progress around sustainability issues in order to gain further ground. The report notes that hyperscalers were already putting in place several design and operation changes to their new data centers to be first among equals – once again.