Global Cloud Infrastructure Sales Surpass $21B In Q1 2019: 5 Things To Know

Synergy Research reports the global cloud infrastructure market has eclipsed $21 billion in the first quarter of 2019 and despite ‘the law of large numbers’ continues to grow at an impressive clip.

The 2019 Cloud Kickoff

Growth in global spending on cloud infrastructure slowed slightly in the opening months of 2019, but only because the market has become so large that previous rates were unsustainable.

"The overall growth rate has tailed off a bit due to the law of large numbers, but this should absolutely not be viewed as a weakness in the market," said John Dinsdale, a chief analyst at Synergy Research Group.

"Predictably this growth rate was somewhat lower than that seen throughout 2018 as the massive scale of the market now forces growth rates to moderate," Dinsdale said in an analysis of financials that data major providers reported for the first quarter.

Synergy calculated spending on cloud infrastructure services—which the researcher groups as Infrastructure as a Service, Platform as a Service and hosted private cloud—shot up 42 percent in the first quarter, which means cloud is "still growing at a very impressive rate for such a big market."

The defining characteristic of the market remains as it has been for several years: The big just keep getting bigger.

In the first quarter, the five largest providers reaped three quarters of total cloud spending, with Amazon Web Services alone controlling one-third of the entire market.

The industry's overall revenue for January, February and March amounted to $21 billion—bringing the trailing 12 months in at $75 billion. That made the first quarter the eighth consecutive quarter in which the market grew more than $1 billion from the one before it, Dinsdale noted.

Click through the slide show to find out five things about the latest data.

5. AWS In A League Of Its Own

Amazon Web Services is maintaining its market dominance in public cloud, even as its immediately trailing challengers all grow at a much faster rate.

The law of large numbers impacts Amazon's business more than any others, and the actual dollar amount of new sales still eclipses faster-growing competitors.

AWS still managed to slightly edge out overall market growth with 44 percent year-over-year expansion in the segments Synergy evaluated—the cloud leader's eighth straight quarter beating the larger market.

AWS maintains 33 percent market share—still larger than the next three hyper-scale competitors combined.

4. Microsoft And Google Give Chase

Microsoft's Azure cloud division and Google Cloud Platform both grew their businesses faster than 70 percent in the segments Synergy evaluated, putting pressure on the dominant market leader.

Microsoft is close to achieving half of Amazon's cloud revenue, now controlling 16 percent of the market.

And Google took in half of Microsoft's revenue in the first quarter, giving the internet services giant an 8 percent share of the infrastructure market, according to Synergy estimates.

3. Chinese Upstarts Stepping Up

China's two largest internet companies have emerged as challengers to watch in the public cloud market.

Alibaba and Tencent both made Synergy's "high-growth" group by achieving faster than 70 percent year-over-year revenue expansion in the first quarter, matching the growth of Microsoft and Google.

Alibaba now controls 5 percent of the global market and is a force to be reckoned with as a provider especially relevant to companies doing business in Asian markets.

Tencent can claim 2 percent market share and the distinction of growing faster than any other provider evaluated by Synergy in its latest report.

2. Falling Back

IBM's cloud business hasn't been able to match the growth of its closest competitors, and over the last year has been taken over by Google as the infrastructure market's third-largest provider.

Big Blue grew slower than 25 percent in the first quarter, well below the market average, dropping to roughly 6 percent total share—a couple of points below where it was positioned at the close of 2017, according to Synergy.

The reason for lagging sales may be IBM has traditionally taken its strength in the segment from its hosted private cloud business.

But in the latest analysis, public IaaS and PaaS "account for the bulk of the market," Synergy's Dinsdale said. Those services are growing faster than the overall market at 48 percent.

IBM has slipped into a category that Synergy regards as "strong niche players."

1. Strong Niche Players Holding The Rear

Salesforce, Oracle and Rackspace, like IBM, round out the category of niche providers doing well by playing to their individual strengths.

Among them, Salesforce leads with 4 percent market share, entirely on the strength of its PaaS business, which expanded by 50 percent in the first quarter.

Oracle and Rackspace haven't been able to grow their cloud infrastructure businesses faster than 25 percent (Oracle slightly outpaced Rackspace). Both of those companies maintain control over roughly 2 percent of the total market.