End-user spending on public cloud to jump 20% next year

The 20.4% projected hike in spending will be driven by business needs and emerging technologies such as generative AI, claims Gartner.

All segments of the cloud market that the analyst tracks are expected to grow, with Infrastructure-as-a-service forecasted to experience the highest end-user spending growth at 26.6%, followed by platform-as-a-service at 21.5%.

“Cloud has become essentially indispensable,” said Sid Nag, Vice President Analyst at Gartner. “However, that doesn’t mean cloud innovation can stop or even slow. The tables are turning for cloud providers as cloud models no longer drive business outcomes, but rather, business outcomes shape cloud models.

“For example, organisations deploying generative AI (GenAI) services will look to the public cloud, given the scale of the infrastructure required. However, to deploy GenAI effectively, these organisations will require cloud providers to address nontechnical issues related to cost, economics, sovereignty, privacy and sustainability. Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows.”

Another trend driving cloud spending is identified as industry cloud platforms, which the analyst says address ‘industry-relevant business outcomes by combining underlying software-as-a-service (SaaS), PaaS and IaaS services into a whole-product offering with composable capabilities.’ By 2027 more than 70% of companies will use industry cloud platforms, up from less than 15% in 2023, reckons Gartner.

“GenAI adoption will also support the growth in industry cloud platforms,” added Nag. “GenAI models that are applicable across diverse industry verticals might require significant customisation, affecting scalability and cost-effectiveness. Public cloud providers can position themselves as partners in the responsible and tailored adoption of GenAI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds.”

Gartner’s full table of stats can be seen below.

While it may be on course to enjoy even more growth next year, in the UK The Competition and Markets Authority (CMA) formally launched an investigation into the UK cloud market last month, based on concerns flagged by telco regulator Ofcom.

The regulator didn’t mention Amazon Web Services (AWS), Microsoft Azure, and Google Cloud by name but they are famously account for the bulk of the public cloud market.

“This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential,” said CMA chief executive Sarah Cardell, in a statement.