Unsurprisingly, companies continue to cut their cloud spending where possible, as technology budgets continue to come under careful scrutiny. That resulted in a quarter in which cloud grew 19%, $10 billion more than last year to $63 billion. That doesn't sound so terrible, except when you compare the numbers to last year when the market grew 32%.
Clearly we are still in a cycle of cost reduction and it is having an impact on cloud infrastructure revenue growth, but the Synergy Reports show that there are signs that we may be breaking out of the recent impasse. Synergy chief analyst John Dinsdale says that overall the market remains solid and we are beginning to see a change in some of the trends that have contributed to the downward growth.
“There has been some angst over declining cloud growth rates, but the first quarter global market value grew by more than $10 billion compared to the first quarter of 2022. Clearly, the relatively weak economy has caused Some companies are looking closely at spending on cloud services, but the market continues to grow despite these challenges,” Dinsdale wrote in a comment.
He notes that the Chinese market has returned to growth and exchange rate pressure has started to ease, contributing to growth in the EMEA and APAC regions. “The law of large numbers pretty much dictates that growth rates should decrease, but in absolute terms, the market continues growing at a healthy pace, fueled by the fundamental benefits of cloud adoption,” said Dinsdale.
It's fair to say that most industries would be happy with a growth rate of almost 20% in this economic climate, but cloud has been dealing with rates in the high 30s until recently, so it's looking worse, and As we have learned, perception counts.
This is especially true of Amazon, where AWS has been the company's growth engine for over a decade and is suddenly facing a quarter in which growth plummeted to 16%. Again, for a mature company, that's not too bad, but cloud revenue numbers continue to trend lower from the 20% rate the company saw in the previous quarter.
Meanwhile, Azure's growth also continued to decline. While Microsoft's cloud arm grew at a higher rate than Amazon's at 27%, that figure was down from 31% in the previous quarter. Google Cloud it rose 27,5%, a slowdown from 32% the previous quarter, but turned a profit for the first time.
What impact does all that have on market share? It wasn't that much. Amazon has held a fairly stable third of the market for years, even as the paste has grown. Microsoft has been slowly but steadily gaining, and Google has hit 10% and is holding steady there so far. The big three account for 65% of total revenue.
For the quarter, AWS continues to have a 32% market share, with more than $20.000 billion in the quarter, Microsoft was flat from the prior quarter at 23%, with more than $14.000 billion in revenue for the quarter, and with 10% of Google Cloud raised more than $6 billion.
Nothing goes up forever, but there are signs on the horizon that perhaps the cloud infrastructure market is growing again. There is certainly still plenty of room, especially with these companies looking to add data-intensive AI workloads, and with that, the market should stabilize over time.
Synergy looks at infrastructure and platform as a service, as well as hosted private clouds, to get their market numbers.
