Global public cloud infrastructure spending grows more than 40% in 2020

Public cloud infrastructure-as-a-service spending hit $64.3 billion in 2020, up 40.7% from the year before, as the COVID-19 pandemic pushed more companies to move computing workloads online, according to a report today from market research firm Gartner Inc.

Amazon Web Services Inc. once again ranked as the top dog among IaaS public cloud services providers in terms of revenue, with Microsoft Corp. in second place and Alibaba Cloud, the cloud computing subsidiary of Alibaba Group Ltd., coming in third. Google LLC ranked fourth, and Huawei Technology Co. Ltd. raised eyebrows by coming in at fifth place in Gartner’s ranking.

Gartner Research Vice President Sid Nag said hyperscale cloud providers are building more distributed cloud and edge solutions that extend the public cloud’s reach into private and on-premises locations. These efforts help address organizations’ need for data sovereignty, workload portability and network latency, thereby spurring more rapid growth.

“This fact, coupled with reliance on the public cloud by a majority of organizations during the pandemic, drove another year of double-digit market growth in 2020,” Nag said. “The era of CIOs investing in cloud IaaS and platform as a service discretely is long over. While the cloud market will continue to grow, the real opportunity for providers comes from growth in cloud-adjacent technology markets such as edge, 5G and AI, as CIOs look to invest in technologies that address their complex and emerging use cases.”

AWS saw its IaaS cloud services revenue grow in 2020 by 28.7%, to more than $26 billion, though its market share fell to 40.8%, down from 44.6% in 2019, Gartner said.

Microsoft managed to hold onto its second position in the market thanks to enormous revenue growth of 59%. Its total cloud IaaS sales came to $12.7 billion, accounting for 19.7% of the overall market, up from 17.4% in 2019. Gartner said Microsoft benefited from the increased demand for remote work, as existing Azure customers moved more mission-critical workloads to the cloud. Examples of those migrating include healthcare applications, digital twins in manufacturing and e-commerce.

Alibaba enjoyed massive revenue growth too. The company, which operates mostly in China, saw its total IaaS cloud services sales hit $6.1 billion in 2020, up 52.8% from the year before. That gave it a 9.5% share of the market, up from 8.8% one year prior.

Google saw the fastest revenue growth among U.S. cloud providers on Gartner’s list, with IaaS sales up more than 66%, to $3.9 billion. Its market share increased to 6.1%, up from 5.2% in 2019. Gartner said that was a result of Google Cloud Chief Executive Thomas Kurian’s focus on growing industry verticals such as healthcare, government and retail, plus the company’s progress in hybrid and multicloud.

Far and away the biggest surprise in the list was China’s Huawei, the beleaguered smartphone and networking firm. Gartner said the company had moved quickly to embrace cloud computing amid pressure on its primary businesses.

Huawei saw its cloud IaaS revenue surge by a stunning 202.8%, to $2.7 billion, giving it a market share of 4.2% in 2020. That’s up from just 1.9% in 2019, and marks the company’s first appearance in Gartner’s top five list of cloud IaaS providers, displacing IBM Corp. Gartner said more than 90% of Huawei’s cloud revenue came from China.

“After 2019, Huawei made a hard pivot away from selling equipment to investing heavily in its cloud services business, which is starting to yield results,” Nag said.

Image: Gartner