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Cloud 'as a service' market to reach $70bn by 2023

September 23 2019
by Greg Zwakman, Yulitza Peraza


Introduction


According 451 Research's Market Monitor & Forecast, the cloud computing as-a-service (CCaaS) market will continue to represent the predominant IT strategy for deployment by the enterprise over the next five years. CCaaS annual revenue is expected to almost double, growing from $35.3bn in 2018 to $70bn by 2023, representing a compound annual growth rate (CAGR) of nearly 15%.

The 451 Take

The CCaaS market – which includes IaaS, PaaS and infrastructure software as a service (IT management as a service, backup, archiving) – is expected to reach total revenue of $70bn in 2023, according to the latest update from 451 Research's Cloud Computing Market Monitor. The fastest-growing segments illustrate a high demand for IT management as a service and cloud integration platforms. Within the public cloud marketplace, the greatest growth is expected to come from integration PaaS offerings, as well as IT service management, followed by systems and network monitoring and management.

Market summary


As illustrated below, our cloud market-sizing contains various sectors that are broken out in our market overview report, and then examined in depth in our biannual reports.

Figure 1
Figure 1: Cloud Market Taxonomy 451 Research's Cloud Computing Market Monitor

The latest figures, providing updated market and vendor estimates through the first half of 2019, indicate that the cloud computing as-a-service market as defined above will grow at a CAGR of 14.7% from $35.3bn in revenue in 2018 to nearly double and reach total revenue of $70bn in 2023.

Figure 2
Figure 2: Market Revenue 451 Research's Cloud Computing Market Monitor

Key findings


  • The IaaS marketplace generated most of the total cloud computing market revenue, standing at 56% in 2018. This market sector is also the largest in terms of vendor count, with 275 vendors of all sizes in our analysis. IaaS accounts for the greatest value creation as well – we estimate it will generate $18.8bn in new revenue between 2018 and 2023. AWS is the largest vendor in terms of IaaS revenue, with nearly half of the total market in 2018.

  • Infrastructure SaaS is the second-largest sector, with a 25% market share in 2018. I-SaaS includes 182 vendors, with the largest group (92) of these vendors competing in the systems and network monitoring & management (SNM&M) segment.

  • Within the I-SaaS stack, SNM&M generated 35% of the revenue in 2018, closely followed by ITSM with 27% market share. ITSM accounts for the largest 2018-2023 CAGR in the I-SaaS market, standing at 17.8%, followed by SNM&M, with a 16.9% CAGR for the same period.

  • PaaS generated 18% of total cloud computing revenue in 2018 and includes 73 vendors. PaaS from SaaS generated more than half of the PaaS market revenue in 2018, with a 54% market share. Stand-alone PaaS is the second-largest market within PaaS, and has the most vendors (37). In 2018, iPaaS is the fastest-growing segment in our cloud computing market analysis, with a projected 2018-2023 CAGR of 20.1% – yet it accounts for 17% of the PaaS marketplace and just 3% of the total cloud computing market.

  • In addition to the overall market and sector revenue, our Cloud Computing Market Monitor examines market revenue generation by geographic segment. Unsurprisingly, North America accounts for more than half of the total revenue, followed by EMEA, APAC and LATAM. However, LATAM is showing the fastest growth, albeit from a smaller revenue base.

  • Given the bottom-up nature of our market analysis, we can provide granular detail at the vendor level. For example, market revenue generated by publicly traded firms accounted for 83% of the total in 2018, with private firms representing the remaining 17%. In terms of the number of vendors, however, publicly traded companies represent 35% of the total revenue.

  • The revenue distribution shows that most of the vendors included in the cloud computing market are still below the $25m threshold (76% of total vendors). Among the 479 providers included, only seven vendors accounted for more than $1bn each in aggregate revenue for 2018, with 91% of all vendors generating less than $100m in annual revenue.