Public cloud spending soared to $126 billion in Q1

Income from operators and suppliers in the major public cloud service and infrastructure markets rose 26% to $126 billion in the first quarter of 2022, according to the latest numbers from Synergy Research Group.

The biggest growth was in infrastructure and platform-as-a-service (IaaS and PaaS), whose first-quarter revenue grew 36% to more than $44 billion.

Managed private cloud services, enterprise software as a service (SaaS), and content delivery networks (CDN) contributed an additional $54 billion in service revenues, an average increase of 21% compared to the same period a year ago.

With demand spiked, public cloud providers spent $28 billion developing, leasing and equipping their data center infrastructure, up 20% from Q1 2021.

Demand for data center hardware was driven by the growth of hyperscale data center capacity, which increased by 18% to meet rapidly growing cloud usage.

Microsoft, Amazon, Salesforce and Google were the most strongly represented companies in the public cloud ecosystem. IBM, Oracle, Adobe, Cisco, Alibaba, Dell, SAP, VMware, Digital Realty and Inspur among the other prominent players.

According to Synergy, these companies together account for 60% of total public cloud revenues.

“Public cloud-related markets typically grow at rates ranging from 15% to 40% per year, with PaaS and IaaS leading the way,” said John Dinsdale, principal analyst at Synergy Research Group.

“Looking at the next five years, growth rates will inevitably decline as these markets become more massive, but we still forecast annual growth rates that are generally between 10% and 30%.”

Dinsdale says the major cloud providers will require an ever-larger footprint of hyperscale data centers and more raw computing power to enable cloud service markets to keep up with demand. He expects the market to double in size in the next three to four years.

According to Synergy, the US remains the ‘center of gravity’ of the cloud industry.

In the first quarter, 44% of all cloud service revenues came from the US, and the country accounted for 51% of hyperscale data center capacity.

Most players in the service and infrastructure market are US companies. The rest is mainly made up of Chinese companies.

China accounted for 15% of hyperscale data center capacity and 8% of total cloud services revenue in the first quarter.

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