Worldwide revenue for the public cloud services market totaled $669.2 billion in calendar year 2023, an increase of 19.9% compared to 2022, according to new data from the International Data Corporation (IDC) Worldwide Semiannual Public Cloud Services Tracker.
The largest source of public cloud services revenue in 2023 was software as a service (SaaS) – applications, which accounted for nearly 45% of the market total. Infrastructure as a service (IaaS) was the second largest revenue category with 19.9% of the total, while platform as a service (PaaS) and SaaS – system infrastructure software (SIS) delivered 18.4% and 17% of overall revenue respectively. PaaS and SaaS – SIS were the categories with the fastest year-over-year revenue growth.
“In large part due to end-user investment in AI, PaaS revenue growth continues to outpace the overall cloud market,” Adam Reeves, research director, PaaS for developers of modern and edge applications, said. “Both market share-leading vendors and smaller providers continue to release PaaS-delivered AI offerings. Vendors are focused on being strategic partners to their customers by delivering highly performant, developer-friendly, trustworthy and secure offerings that help users deliver intelligent applications more efficiently.”
The leading providers of public cloud services maintained their positions in 2023 with the combined revenue of the top 5 public cloud service providers — Microsoft, Amazon Web Services, Salesforce, Google and Oracle — capturing 40.5% of the worldwide total. With offerings in all four deployment categories, Microsoft remained in the top position in the overall public cloud services market with 16.8% share in 2023, followed by Amazon Web Services with 12.4% share.
IDC forecasts worldwide public cloud services revenue will surpass $800 billion in 2024, an increase of 20.5% over 2023 with a similar increase expected in 2025. While the annual rate of growth will slow slightly over the forecast period, the market is still forecast to deliver a five-year compound annual growth rate (CAGR) of 19.5% with worldwide revenues reaching $1.6 trillion in 2028.
“The mainstreaming of AI is driving organizations to rethink their infrastructure strategy,” Dave McCarthy, research vice president, cloud and edge infrastructure services, said. “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. The on-demand and pay-as-you-go tenets of cloud infrastructure facilitate access to the latest AI technology without large upfront investments or supply chain delays.”
