The B2B market: a gateway for OTT leaders
Cloud computing remains the driving force behind the B2B IT sector, and already represents close to a third of IT spending. The sector is largely dominated by B2C service leaders who are taking advantage of these technologies to diversify into B2B segments. The cloud acts as the backbone for all other technologies (IoT, artificial intelligence, big data…) which are then deployed as complementary building blocks.
A market showing no signs of flagging
The public cloud computing market will be worth 139 billion EUR in 2019, and continues to grow by around 20% a year, making it both one of the biggest Internet segments and the sector’s driving force. The cloud market is benefitting from major corporations’ growing reliance on the cloud, and from the increasing use of IT solutions by small and medium businesses, which had previously stayed away for cost reasons. North-America is by far the most developed market – still accounting for close to 50% of revenue in 2023 – as with all IT markets, for that matter. The best developed market segments are IaaS (Infrastructure as a Service), which delivers IT resources (storage, computing power…) on demand, and SaaS (Software as a Service) which enables users to employ shared applications online.
US cloud market leadership reflects its of IT and B2B sofwtare market dominance
Progression of regional public cloud revene
An essentially North America ecosystem
The public cloud computing market is essentially populated by four heavyweights, including three Americans (Amazon, Microsoft and Google) that are now being challenged by Alibaba, which is reporting massive growth rates thanks to its international expansion. At the end of 2018, these four companies had a combined 71% share of the public cloud market. For these major OTT players who are currently targeting mainly consumers, the public cloud constitutes the first step into the B2B market, before undertaking a broader diversification (IoT…).
SaaS providers, such as Salesforce, naturally have smaller shares of the market as they are positioned in specific segments, whereas IaaS is aimed at everyone. The situation is relatively similar in the private cloud computing market: largely dominated by American companies, but often with other key players such as IBM and the top IT integrators in general.
Amazon and Microsoft account for half of the public cloud market
Main public cloud players worldwide, in 2018
New cloud and virtualisation models
The cloud is developing at a tremendous pace, thanks to its strong return on investment, and despite a host of challenges. Many companies are still reluctant to embrace it, for data-related (security, ownership) reasons, and because of technical performance issues. Sovereignty is a major source of concern for governments, as reflected in initiatives like the new Gaia-X in Europe. At the same time, the cloud computing boom has required the construction of a growing number of datacentres, which raises thorny energy consumption issues in this era of climate change worries.
The cloud’s underlying principles, starting with virtualisation, are also developing outside the IT sector, notably in telecoms, with 5G’s SDN/NFV and slicing solutions. They are also expanding gradually outside the initial centralised model, taking a distributed approach called edge computing.
Increasingly distributed cloud computing
Edge computing's share of cloud revenue
Amazon, the undisputed (Web-only) leader
Much to general astonishment, Amazon pulled off its bold move of entering the cloud market in 2006, with AWS. Amazon Web Services has become one of the company’s main pillars and a major source of revenue, and especially margins, despite a very aggressive pricing policy. The division has accounted for 90% of the company’s profits several times over. The product line is vast, including some 100 services. Capitalising on its cloud market leadership, Amazon is expanding naturally into other areas that had long been the dominion of other specialists, and in some cases taking over as market leader (despite coming late to the game), notably by leveraging IoT platforms.