The worldwide infrastructure as a service (IaaS) market grew 29.5% in 2017 to total $23.5 billion, up from $18.2 billion in 2016, according to Gartner, Inc. Amazon was the No. 1 vendor in the IaaS market in 2017, followed by Microsoft, Alibaba, Google, and IBM.

"The top four providers have strong IaaS offerings and saw healthy growth as IaaS adoption is being fully embraced by mainstream organizations and as cloud availability expands into new regions and countries," said Sid Nag, research director at Gartner. "Cloud-directed IT spending now constitutes more than 20% of the total IT budget for organizations using cloud. Many of these organizations are now using cloud to support production environments and business-critical operations."

In the IaaS market, the competitive landscape is consolidating around the leaders. The top four providers — Amazon, Microsoft, Alibaba, and Google — are all hyperscale IaaS providers and represent approximately 73% of the total IaaS market and 47% of the combined IaaS and infrastructure utility services (IUS) market.

Amazon is the clear leader in the worldwide IaaS market with an estimated $12.2 billion revenue in 2017, up 25% from 2016 (see Table 1 below). The largest of the IaaS providers, Amazon is also the most mature, enterprise-ready provider, with the strongest track record of customer success and the most useful partner ecosystem. Growth in 2017 was driven not only by customers that are migrating from traditional data centers to cloud IaaS, but also by customers implementing transformational digital business projects, reflecting its broad range of use cases.

Microsoft secured the No. 2 position in the IaaS market with growth of more than 98% on its IaaS offering, with revenue surpassing $3.1 billion in 2017. Microsoft delivers its IaaS capabilities through its Microsoft Azure offering, which is a collection of infrastructure and platform services.

In the third spot, Alibaba's 2017 growth of 63% reflects the company's successful investment in research and development (R&D). Alibaba has the financial capability to continue this trend and invest in global expansion, giving the company potential to become over time an alternative to the global hyperscale cloud providers in select regions.

"This reflects a fundamental change in what and how organizations are consuming technology. Some legacy infrastructure offerings, such as IUS, are seeing lower and slower uptake that impacts the combined IaaS and IUS market," Nag said. "Additionally, a groundswell of demand for cloud-skilled personnel is forcing technology providers to change how they compete to meet this exploding demand."

Gartner clients can learn more in the report "Market Share Analysis: IaaS and IUS, Worldwide, 2017."

Gartner Global IT Infrastructure, Operations & Cloud Strategies Conference

Gartner analysts will provide additional analysis on cloud strategies and infrastructure and operations trends at the Gartner IT Infrastructure, Operations & Cloud Strategies Conference taking place November 26-27 in London and December 3-6 in Las Vegas.

Table 1.

Worldwide IaaS Public Cloud Services Market Share, 2016-2017 (Millions of U.S. Dollars)

Source: Gartner (August 2018)