Amazon retains IaaS crown as market grew in 2023

In total the IaaS market clocked $140 billion last year, up from $120 billion in 2022, according to Gartner. Aside from Amazon, the other big winners in the space were Microsoft, Google, Alibaba and Huawei.

In fact, these five firms accounted for 82% of the market collectively. Amazon claimed 39% of the sector, earning it revenues of $54.6 billion during the year. Microsoft took 23%, and Google grew 26.3% during 2023, earning it third position and 8.2% market share.  Alibaba meanwhile was fourth with 7.9% of the market.

“Cloud technologies continue to be a major business disruptor, due in part to the focus on hyperscalers looking to support offerings related to sovereignty, ethics, privacy and sustainability,” said Sid Nag, VP Analyst at Gartner. “This should continue to drive exponential growth into the future with these offerings being spurred by generative AI (GenAI) investments for 2024 and beyond.”

GenAI is beginning to have an impact on the growth of cloud markets, says Gartner, however ‘AI-driven growth’ was small in 2023. To this point Nag added:

“Cloud is the foundational and scalable substrate required to make GenAI a reality. The segments that are beginning to see the impacts of GenAI include IaaS, where AI model training is consuming IaaS resources, and SaaS where GenAI capabilities are beginning to be included in SaaS applications. Capacity demand in public cloud markets has already increased sharply as a result and will continue to do so through 2028. In the near term, AI-driven revenue growth will be small relative to the overall public cloud market.”

Fellow analyst recently put global public cloud spending in general for the year at $670 billion, and predicted that it rise by 20.5% to reach $800 billion this year, and by 2028 it expects it to clock in at $1.6 trillion.

AI was also held up as a growth driver by IDC, with Dave McCarthy, IDC research vice president covering cloud and edge infrastructure services stating: "Public cloud IaaS will be an attractive source for AI-ready infrastructure as cloud service providers are heavily investing in the high-performance compute, storage, and networking services needed for AI workloads."

Investment in various AI facilitating technology has been the story for a couple of years now, and while it’s good news for the likes of Amazon, Microsoft, and further up the supply chain Nvidia in particular, there are signs some execs remain unsure what the AI revolution is supposed to bring to the table for their company specifically.

Earlier this month, a survey by RWS claimed almost all c-level execs are feeling pressured into deploying GenAI, but 68% admitted that they find it difficult to identify genuine innovators, and 36% raised concerns that GenAI enthusiasm is diverting resources that could be better deployed elsewhere.

No doubt GenAI will continue to evolve and surprise us with new abilities, but how closely some of the more bombastic statements of how revolutionary the latest wave of LLMs will be aligns with on the ground changes and benefits for businesses in the near term remains to be seen. One thing seems sure though, it’s going to help provide hyperscalers with a rich vein of revenue for a good while.