Cloud Infrastructure Market Reaches $65 bn in Q2, Major Providers Maintain Dominance

Global enterprise spending on cloud infrastructure services soared to $65 billion in the second quarter of 2023, marking a significant $10 billion increase from the same period last year.
Q2 2023 Cloud vendors
This is the third consecutive quarter in which the cloud market has grown by $10 billion compared to 2022, demonstrating the industry’s resilience despite economic challenges, according to a research report from Synergy Research Group.

The year-on-year growth rate for Q2 2023 was recorded at 18 percent, slightly down from 19 percent in the previous quarter and 20 percent in Q4 2022. Despite this slight dip, the cloud market remains robust, as Q2 spending showed a 3 percent increase from Q1, similar to the quarter-on-quarter growth rate observed in the previous year.

Major Players’ Market Share and Growth Performance

Among the major cloud providers, Google and Microsoft exhibited the strongest year-on-year growth numbers, enabling both companies to expand their worldwide market shares by one percentage point from Q2 2022. Google’s market share reached 22 percent, while Microsoft’s reached 11 percent. On the other hand, market leader Amazon maintained its long-standing market share band of 32-34 percent, hovering around the lower end of that range. Combined, the three industry giants accounted for 65 percent of the global cloud market.

Emerging Players with High Growth Rates

In the tier two cloud provider category, several companies displayed impressive year-on-year growth rates. Notable mentions include Oracle, Snowflake, MongoDB, VMware, Huawei, and China Telecom.

Quarterly Cloud Infrastructure Service Revenues

Synergy Research Group estimates that quarterly cloud infrastructure service revenues, encompassing Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and hosted private cloud services, reached an impressive $64.8 billion for Q2 2023. Trailing twelve-month revenues amounted to a staggering $247 billion. Public IaaS and PaaS services were the main drivers of growth, expanding by 19 percent in Q2.

Dominance of Major Cloud Providers

The dominance of the major cloud providers is particularly pronounced in the public cloud sector, where the top three players control a staggering 72 percent of the market.

Global Growth in All Regions

The cloud market continues to exhibit robust growth across all regions of the world. The Asia-Pacific (APAC) region experienced the strongest growth, with India, China, Australia, and South Korea all witnessing growth rates well above 20 percent year-on-year.

Challenges and Future Expectations

The growth rate in cloud spending is gradually declining, influenced by macroeconomic pressures and some belt-tightening by enterprises. Local market issues in China and the law of large numbers are also contributing factors to the moderate slowdown in growth rates. However, despite these challenges, the cloud market continues to expand substantially, with quarterly growth consistently reaching $10 billion compared to the previous year.

With the Chinese market potentially returning to more normal circumstances, economic pressures easing, and enterprises optimizing cloud usage and spending, Synergy Research Group anticipates that future cloud growth rates will remain positive and buoyant.

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