• Amazon, Microsoft and Alibaba led the race.
• Market witnessed another year of double digital growth in 2020 due to organisations reliance on the public cloud during the pandemic.
• Hyperscale providers are continuing to build distributed cloud and edge solutions that extend the public cloud’s reach into private and on-premise locations.
• Real opportunity for providers comes from growth in cloud-adjacent technology markets such as edge, 5G and AI, as CIOs look to invest in technologies that address their complex and emerging use cases.
• Huawei broke into the top five IaaS vendors for the first time in 2020.

Amazon retained the top position in the infrastructure-as-a-service (IaaS) market in 2020, followed by Microsoft, Alibaba, Google and Huawei as the market grew 40.7 per cent to $64.3 billion in 2020 compared to $45.7 billion in 2019.

According to Gartner, Amazon raked in $26.2 billion in revenues in 2020 and held a market share of 41 per cent but Amazon’s 28.7 per cent growth was slightly slower than that of the market, with their sales growth primarily reflecting increased customer usage.

“Hyperscale providers are continuing to build distributed cloud and edge solutions that extend the public cloud’s reach into private and on-premise locations, addressing the needs of organisations relating to data sovereignty, workload portability and network latency,” Sid Nag,  Research Vice-President at Gartner, said.

Moreover, he said that the market witnessed another year of double digital growth in 2020 due to organisations reliance on the public cloud during the pandemic.

“The era of CIOs investing in cloud IaaS and platform as a service (PaaS) discretely is long over,” he said.

While the cloud market will continue to grow, he said the real opportunity for providers comes from growth in cloud-adjacent technology markets such as edge, 5G and AI, as CIOs look to invest in technologies that address their complex and emerging use cases.”

Huawei’s investment bears fruit

In 2020, the top five IaaS providers accounted for 80 per cent of the market, and nearly 90 per cent all IaaS providers exhibited growth.

Microsoft maintained the second position with nearly 60 per cent growth, reaching $12.7 billion in revenue in 2020.

The global healthcare crisis and disruption in workplace environments during the pandemic era drove increased demand from existing Microsoft Azure customers to migrate mission-critical workloads, such as from healthcare applications with AI-assisted bots, digital twins in manufacturing and e-commerce in retail.

The dominant IaaS provider in China, Alibaba, grew 52.8 per cent in 2020 with revenue surpassing $6 billion, up from $4 billion in 2019.

In 2020, Nag said that Alibaba saw its highest growth rate in the education vertical at 105 per cent, driven by downloads of Alibaba’s enterprise communication and collaboration platform DingTalk among employees and students working and studying from home.

After its second consecutive year of over 200 per cent growth in the IaaS market, Huawei broke into the top five IaaS vendors for the first time in 2020, with $2.7 billion in revenue.

Over 90 per cent of Huawei’s revenue comes from Greater China, a region that continues to see rapid cloud market growth.

“After 2019, Huawei made a hard pivot away from selling equipment to investing heavily in their cloud services business which is starting to yield results,” Nag said.

Google’s IaaS revenue grew 66 per cent to reach nearly $4 billion in 2020. Spending from the retail, government and healthcare sectors helped drive Google’s growth in IaaS in 2020, as did their focus on supporting the development and deployment of cloud applications in both a hybrid and multicloud model.