Spending on Public Cloud Services to Hit $127 Billion by 2018

By Laura Stotler

Adoption and spending on public IT cloud services has been steadily increasing and that trend will continue for the next several years. A shift to “cloud first” strategies has become pervasive among both IT vendors and buyers and that attitude is set to drive the market, with public cloud services poised to account for more than half of global spending growth on software, servers and storage.

IDC has released its new study, Worldwide and Regional Public Cloud IT Services, forecasting that spending will jump from $56.6 billion this year to more than $127 billion by 2018. That means public cloud spending is growing roughly six times faster than the general IT market, with a 22.8 percent CAGR predicted over a five-year period.

The forecast is a bit more aggressive than Gartner’s recent prediction of 17.1 percent CAGR for public cloud services through 2018. While Gartner admits that public cloud services are cannibalizing more traditional data center outsourcing services, the research firm is more conservative about the dent that is making in overall IT spending.

"In 2015, IT services will total $1 trillion, and the cloud portion will be $17 billion," John Lovelock, research vice president at Gartner, recently told InformationWeek. "Yes, cloud is important and interesting, but it's never going to surpass even half of either the hardware-support market or the software-support market."

IDC characterizes the cloud services market as entering an “innovation stage” that is expected to yield a plethora of new solutions and value-added services built on top of the cloud. The end result will have cloud services extending into virtually every B2B and consumer services marketplace imaginable.

"Over the next four to five years, IDC expects the community of developers to triple and to create a ten-fold increase in the number of new cloud-based solutions," said Frank Gens, senior vice president and chief analyst at IDC. "At the same time, there will be unprecedented competition and consolidation among the leading cloud providers. This combination of explosive innovation and intense competition will make the next several years a pivotal period for current and aspiring IT market leaders."

Public cloud offerings will run the gamut from industry-focused platforms with their own niche communities of developers to SaaS offerings, which will make up the largest amount of spending at roughly 70 percent for 2014. IaaS is the second biggest spending category, expected to grow at 31 percent CAGR, followed by PaaS and cloud storage services.

Edited by Stefania Viscusi

MSPToday Contributing Editor

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