The Cloud infrastructure services spending increased 53.1 percent to $10 billion for the first time in Q3 2016.
Amazon Web Services (AWS) has increased its lead, accounting for 32.2 percent of total spend in Cloud infrastructure services, followed by Microsoft Azure with 17.3 percent and Google Cloud with 7.6 percent.
Both Microsoft (+115.6 percent) and Google (+79.6 percent) grew faster than Amazon Web Services. Alibaba Cloud outpaced Microsoft, Google and AWS with growth of 128 percent to reach $221 million in Cloud services revenue.
“Alibaba has established itself as the largest e-commerce business in China and is starting to dominate the provision of cloud infrastructure services in the country,” said Daniel Liu, research analyst at Canalys.
The report said China government is playing a key role in market development by making cloud computing a strategic priority in the nation’s twelfth five-year plan through the Internet Plus initiative.
Digitalization in China is having a major impact on people and businesses. The popularity of WeChat, which has over 700 million monthly active users, and the reach of Alipay, which enables over 80 million transactions per day, are cases in point.
The growth in cloud infrastructure services highlights the fundamental shift in the IT industry away from a model based primarily on building systems to one that is more consumption led, which also includes managed services.
The key benefit of public cloud as one of several consumption models is access to potentially unlimited compute and storage resources. These are best suited to new digital workloads with unpredictable traffic patterns.
“But costs can be prohibitive once businesses reach a certain level of use, and the threat of vendor lock-in increases as customers use more of a provider’s digital platform to incorporate IoT, machine learning, mobile and other development tools,” said Matthew Ball, principal analyst at Canalys.