Public Cloud Market 2020 and Forecast 2021-2027

                                          
Report Overview: Public Cloud Market


The global public cloud market size was valued at USD 100.4 billion in 2020 and looks set to grow at a compound annual growth rate (CAGR) of 13.5% from 2021 to 2027. Rapidly increasing digital transformation among industries, penetration of internet and mobile devices, and rise in consumption of big data are the primary drivers fostering market growth.

The development of next generation industrial solutions will be cloud enhanced and require a platform to showcase their digital business capabilities. Rise in internet of things (IoT), edge computing, 5G, use of real-time analytics enabled by artificial intelligence (AI), and machine learning (ML) are likely to boost the utility of this computing technology among the organizations.
With digital transformation, industries are witnessing a change in business models and operational processes. The growth in communication with external partners, other industries, and customers is intensifying, while public cloud is providing a perfect platform for establishing an open inter-company network. Public cloud services cover a large number of functions, from the basics of storage, processing, and networking power through artificial intelligence and natural language processing (NLP) as well as standard office applications.

It is estimated that by 2022, more computing power will be offered and deployed by Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) service vendors than by enterprise data centers. The industrial data suggest that enterprise size of public cloud services is able to increase enterprise savings up to 35% of their annual operating costs. As the shift towards cloud computing continues, the solution providers are likely to tap the growing potential in the coming years owing to the innovations and acquisitions carried out in 2019 by major market players including Amazaon.com Inc.; Google LLP.; and Microsoft Corporation.

The World Economic Forum asserts that the fourth industrial revolution will factor in the combination of technologies such as IoT, AI, machine learning, and cloud computing. AI and machine learning technologies will complement public cloud with IoT to improve technology and accelerate growth. Organizations across various verticals are proactively integrating public cloud with these evolving technologies.

For instance, In July 2019, Universal mCloud Corp., an asset management solutions provider that combines cloud computing, IoT, analytics, and artificial intelligence acquired Fulcrum Automation Technologies, provider of subscription-based data analysis and SaaS platforms. With the help of the AssetCare platform, mCloud Corp. now leverages cloud computing and IoT in the oil and gas sector.
Public clouds are offered where the physical infrastructure is generally owned and managed by the provider. They may provide either a dedicated or shared operating environment with the ability to scale seamlessly on demand and the benefits of accountability. These services offer features such as unlimited capacity, potentially attractive costs rising from large-scale infrastructures and related operational practices, and a pay-as-you-go pricing model that are making up-front server purchases obsolete.

The pay per subscription based model offered by the service providers has provided Small and Medium Enterprises (SMEs) the flexibility to grow to their full potential. Despite some market barriers such as security concerns and legacy systems, the market is likely to maintain a high growth pace in the coming years.

Data security and privacy remain a primary concern among organizations wherein storage, use of information, and transmission must be digitally protected. Surveys suggest that about 60% of the business-sensitive information on hard drives is held insecurely. Data encryption, authorization management, access control, integration, communication security, monitoring and auditing, and business continuity services are some of the important security services offered by the vendors.
For instance, vendors such as Google LLP, Microsoft Corporation, and Amazon.com Inc. provide 99.9% uptime, which relieves organizations from the burden of creating and maintaining recovery facilities and backup infrastructure.

COVID19 Impact Insights: Public Cloud Market

The recent outbreak of the pandemic COVID-19 (Coronavirus), has affected several nations and their economies drastically. The industrial operations are being temporarily suspended and national governments being put in crisis mode. The effects of COVID-19 are having a considerable impact on the ICT sector, disrupting the electronics value chain causing an inflationary risk on products. On the other hand, the disruption has accelerated remote working culture and focus on evaluating the end-to-end value chain.

IT resources enabled by public cloud technology will enhance access to data services and improve the connectivity between people & businesses on a global scale. As per LogicMonitor, a SaaS based IT platform provider, by 2020, it is predicted that about 83% of the company’s work will be done from the cloud. Various media companies, financial sector, educational institutions, and global enterprises will be able to operate and run applications on a variety of mobile devices. In the wake of COVID-19 calamity, the work environments that can be operated remotely in technology driven companies are likely to be benefitted by the cloud technology for a long period of time.

Service Insights: Public Cloud Market

Software as a Service (SaaS) accounted for the largest market share of over 54% in 2019 owing to its flexible costs, easy maintenance, and enterprise size. The industry estimates suggest that there is a rise in the number of companies moving towards the cloud with 73% of enterprises moving almost all of their applications to the SaaS platform. Moreover, the enterprise user data suggests that it is estimated that the user spending on business intelligence SaaS applications is likely to grow by around 23.3% between 2017 and 2022. In addition, the IT industry survey suggests that by 2022, around 60% of the enterprises will utilize an external Cloud Service Provider (CSP) managed service offering, which is twice the percentage share of organizations from 2018.

The PaaS segment is likely to witness substantial growth during the forecast period. Unlike IaaS, PaaS not only includes infrastructure components such as servers, networking, and storage, but also development tools, middleware, Business Intelligence (BI) services, and database management systems. Moreover, the PaaS services are rising at a rapid rate owing to the growth of technologies such as machine learning, IoT, and container-as-a-service.

However, the growth of SaaS products will witness strong growth in the coming years as their Total Cost of Ownership (TCO) will equal to that of the on-premise enterprise size models. In 2018 alone, around 169 SaaS based acquisitions took place with mean acquisition price standing at USD 1.3 billion. Qualtrics International Inc. by SAP SE (USD 8 billion) and GitHub Inc. by Microsoft Corporation (USD 7.5 billion) were the major acquisitions that took place. With more mergers and acquisitions, the establishment of innovative startups in the public cloud arena is likely to propel the market growth over the forecast period 2021-2027.


End-use Insights: Public Cloud Market


BFSI accounted for the largest market share with over 25% in terms of revenue in 2019, owing to the adoption of cloud services for storage and management of customer data. Factors such as interoperability, secure storage, and 24×7 uptime, have helped the BFSI sector to focus more on customer-centric business models and digitalization of trade and wealth. Furthermore, services such as payment gateways, online fund transfer, digital wallets, and unified customer experience will play a significant role in the BFSI industry, facilitating the overall shift to public cloud solutions.

The manufacturing industry is estimated to be the prime adopter of the cloud services owing to benefits such as seamless data management and real-time visibility afforded by this technology. In addition, this computing technology will play a major role in enabling and democratizing new manufacturing production systems such as generative design, 3D printing, and the Industrial Internet of Things (IIoT). Moreover, the healthcare sector too has become the active user of this technology with the advent of telemedicine and e-health facilities. For instance, Nuance Communications Inc’s., cloud hosted PowerScribe One platform uses AI to aid in diagnostics and decision support for radiologists.

Enterprise Size Insights: Public Cloud Market

The small and medium enterprise segment dominated the market with a revenue share of more than 70% in 2019. Large enterprises have been the major adopters owing to lower operating costs, better collaboration, increased flexibility, and improved time to market. Enterprises till now were using cloud for building applications and rehosting infrastructure, however, they are now utilizing it to modernize core business applications and processes. A survey conducted in 2019 by Flexera, an Illinois (U.S.) based software company, suggests that companies are likely to spend 24% more on public cloud in the coming years.

However, the SMEs segment has emerged as the largest market shareholder in 2019 owing to the flexible pricing models offered by CSPs, boost in employee productivity, and improvement in collaboration and innovation. The IT industry survey reports that by the end of 2018, 88% of the SMEs have been using at least one cloud service and is likely to increase rapidly in the coming years. The SMEs are instrumental in using the technology for marketing, financial management, project management, and building customer relationships, among others. However, the top priorities for the enterprises adopting cloud are managing and optimizing costs, setting policies for its use, and deciding the choice of cloud to run particular applications.

Regional Insights: Public Cloud Market

North America dominated the market with over 49% share in 2019 owing to the early adoption of the technology. The presence of numerous vendors in the region such as Microsoft Corporation; Oracle Corporation; Amazon.com Inc.; and IBM Corporation, among others and the higher propensity to adopt new technologies is expected to help these regions maintain their positions in the market. Besides, it is estimated that more than 50% of the government organizations in the U.S. have deployed the services. In addition, the European countries have become a hub for cloud technology development, particularly in the financial sector, which attracts billions of dollars in investment across the globe.

The Asia Pacific is likely to emerge as the fastest growing region in the market over the forecast period. The rapid growth of China and India coupled with the emergence of regional players such as Alibaba Group has had a positive impact on the regional market growth in recent years. Moreover, to meet the data sovereignty needs of the governments, hyper scale cloud providers such as Azure, Amazon Web Services (AWS), and Google LLP are establishing their data centers in markets such as Indonesia and Thailand.

The formation of the Asia Cloud Computing Association, a forum based in the region with the collaboration of Cisco Systems, Rackspace, REACH, Telenor, EMC Corporation, NetApp, Nokia Siemens Networks, Microsoft, Alcatel-Lucent, Verizon, and PLDT/Smart is likely to boost the regional growth.

Key Companies & Market Share Insights: Public Cloud Market

Partnerships and strategic mergers and acquisitions are anticipated to be the most effective way for industry players to gain quick access in emerging markets and enhance technological capabilities.
Also, product differentiation and upgradation is expected to pave the way for the development of companies. Moreover, the rising startup culture and cloud service provider startups such as Snowflake Inc.; Zoom Video Communications.; Slack Technologies; Stripe; Uptake; and Stratoscale will pose potential competition in the market.

In October 2018, IBM acquired the world’s leading open source cloud software provider Red Hat. With the acquisition of Red Hat, IBM is now able to expand its public cloud offerings to a broader range of clients. In the coming years IBM Corporation and Oracle Corporation will not try to gain on the general, hyperscale, global public cloud platform arena that is dominated by Amanzon.com Inc. (AWS), Microsoft Corporation (Azure), Google LLP, and Alibaba. However, IBM will concentrate on helping companies use the OpenShift development platform, to modernize core business applications. Some of the prominent players in the public cloud market include:

Key companies Profiled: Public Cloud Market Report

 	
Alibaba Group Holding Limited
 	
Amazon.com Inc.
 	
Adobe Inc.
 	
Google LLC
 	
 IBM Corporation
 	
Microsoft Corporation
 	
 Oracle Corporation
 	
Salesforce.com Inc.
 	
SAP SE
 	
 Workday, Inc.

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Trusted Business Insights has segmented the global public cloud market report on the basis of service, enterprise size, end use, and region:

Service Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Infrastructure as a Service (IaaS)
 	
Platform as a Service (PaaS)
 	
Software as a Service (SaaS)

Enterprise Size Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Large Enterprise
 	
Small & Medium Enterprise

End-use Outlook (Revenue, USD Billion, 2016 - 2027)

 	
BFSI
 	
IT & Telecom
 	
Retail & Consumer Goods
 	
Manufacturing
 	
Energy & Utilities
 	
Healthcare
 	
Media & Entertainment
 	
Government & Public Sector
 	
Others