The worldwide cloud infrastructure services market rose 47 percent to $14 billion in Q2 2017, according to Canalys.
Amazon Web Services (AWS) is the dominant cloud services provider, growing 42 percent on an annual basis and accounting for more than 30 percent of total spend.
Growth rate of AWS was lower than those of its main rivals. Microsoft achieved 97 percent growth and Google gained 92 percent growth. Fourth-placed IBM grew 23 percent.
The top four cloud services providers represented 55 percent of the cloud infrastructure services market, which includes IaaS and PaaS.
The report said growth in cloud infrastructure services market was driven by demand for primary cloud infrastructure services, such as on-demand computing and storage, across all customer segments and industries.
Future growth will be fueled by customers using the artificial intelligence (AI) platforms cloud service providers are building to develop new applications, processes, services and user experiences.
AWS has an established AI service, focusing on understanding language, speech recognition, visual search, text-to-speech conversion and machine learning technologies.
“It continues to strengthen its AI capabilities, with increased accuracy in speech recognition, as well as offering Volta GPU-powered virtual instances in its EC2 to expand its deep-learning capabilities,” said Canalys Research Analyst Daniel Liu.
“Microsoft is focusing more on machine reading, which will enable automatic understanding of text. It acquired Maluuba, a deep-learning startup, in January this year as it sees AI as a strategic part of the company’s future growth,” Daniel Liu said
Google announced its own dedicated AI chip, called the Cloud TPU, which is the latest version of Google’s custom-built processor that it uses to run its own AI services. Google does not plan to sell the chip directly to others but will offer exclusive access through a dedicated cloud service.
IBM is placing much emphasis on Watson to drive future growth, with APIs such as conversation, discovery and visual recognition. It is being used for services such as virtual agents in contact centers and security intelligence.
Chipset providers also gained traction, with Nvidia’s datacenter GPU business growing nearly 300 percent. AMD’s partnerships with Microsoft, Google and Baidu to provide graphics processors for their AI businesses signifies cloud service providers’ growing investment in hyper-scale hardware with AI-focused capabilities.
Synergy Research Group said Microsoft and Google have almost doubled their quarterly revenues since Q2 of 2016 and both have increased their market share substantially.
AWS continues to grow its revenues more rapidly than the overall market. AWS market share now stands at 34 percent, compared to 11 percent for Microsoft and 5 percent for Google. IBM held its market share steady at 8 percent.
Among the next 10 top-ranked cloud providers, Alibaba and Oracle are achieving the highest growth rates.
AWS, Microsoft and Google are the lead providers in IaaS/PaaS.
IBM continues to lead in hosted private cloud, where Rackspace and some traditional IT service providers also feature more prominently than they do in public cloud.
Alibaba has now become the fourth ranked provider in IaaS, thanks to very strong growth in its home Chinese market, helped by aggressive expansion abroad.