Worldwide spending on public cloud services is poised to double between 2024 and 2028, reaching a staggering $805 billion this year, according to a new report from IDC.
This rapid growth is fueled by the increasing adoption of cloud technology across industries and the accelerating pace of AI innovation, the report added.
“Cloud now dominates tech spending across infrastructure, platforms, and applications,” Eileen Smith, group vice president of Data & Analytics at IDC said in the report. “Most organizations have adopted the public cloud as a cost-effective platform for hosting enterprise applications and for developing and deploying customer-facing solutions.”
Despite a slight slowdown in annual growth over the forecast period, the research and consulting firm said the market is expected to maintain a compound annual growth rate (CAGR) of 19.4% over the forecast period.
“Looking forward, the cloud model remains incredibly well-positioned to serve customer needs for innovation in application development and deployment, including as data, artificial intelligence/machine learning (AI/ML), and edge needs continue to define the forefront of innovation,” Smith added.
Geographically, the US will continue to lead the global public cloud services market, with spending expected to surpass $432 billion in 2024. Western Europe will follow with nearly $167 billion, and Asia-Pacific (excluding Japan and China) will reach over $51 billion. Several regions, including Central & Eastern Europe, Latin America, and the Middle East & Africa, are expected to achieve five-year CAGRs exceeding 20%, the report added.
As per IDC, the financial sector is leading the charge in cloud adoption, with the three largest industries — banking, software and information services, and retail — projected to collectively spend $190 billion on public cloud services in 2024.
Other significant contributors include telecommunications, media and entertainment, capital markets, healthcare providers, and professional and personal services — each accounting for more than 5% of worldwide spending.
Capital markets, life sciences, and insurance are expected to see the fastest growth in cloud spending through 2028, each boasting a CAGR of around 23%. Every industry, except consumer, is anticipated to achieve double-digit growth over the forecast period, the research firm said in the report.
Riding high on AI
AI, in particular, is emerging as a key driver of cloud growth. As organizations invest heavily in building and deploying AI platforms, the demand for cloud infrastructure is soaring. IDC predicts AI platforms will be the fastest-growing technology segment in the cloud market over the next five years.
“The rapid advancements in artificial intelligence are significantly driving the surge in cloud spending. With organizations increasingly building, testing, and deploying AI platforms, the growing interdependence between AI innovation and cloud infrastructure is positioning cloud services as the backbone of AI development and deployment,” Andrea Minonne, research manager of Data & Analytics at IDC, noted in the report.
Software as a Service (SaaS) remained the dominant cloud category, capturing more than 40% of total spending. However, Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) are also experiencing significant growth, driven by the increasing complexity of cloud-native applications and the need for scalable infrastructure, the report added.
PaaS and IaaS are each set to account for nearly 20% of public cloud spending in 2024. PaaS, driven by data management software, will be the fastest-growing category, with AI platforms seeing an explosive five-year CAGR of 51.1%. IaaS, which includes compute, storage, and networking devices, will be the second-fastest-growing segment, the report said,
SaaS for system infrastructure software (SIS) will represent the smallest category, encompassing just over 16% of the market. Within this category, security software will be the top investment area, matching the spending levels of ERM and CRM in the SaaS applications category. Physical and virtual computing software will see the fastest growth among SIS products.
“AI platforms will be the fastest growing technology in the years to come, and in the long run industries like insurance, healthcare payer, and healthcare provider will accelerate cloud-based AI platforms investments the fastest,” Minonne added.
Source:: Network World