Growth in the various cloud platforms has become a dinner party conversation staple of those in the tech industry, in much the same way that house price appreciation was in the mid-2000’s. It’s interesting, everyone has an opinion about cloud computing growth statistics and it’s not entirely clear how it ends.
So let’s start with some industry projections. According to Gartner (News - Alert), the global infrastructure as a service (IaaS) market will grow by 39 percent in 2017 to reach $35 billion by the end of the year. IaaS growth shows no sign of slowing down and is expected to reach $72 billion by 2021, a CAGR of 30 percent. This revenue is principally split by the big-four players in public cloud: Amazon Web Services (AWS), Microsoft Azure (Azure), Google (News - Alert) Compute Platform (GC) and IBM.
The approximate market share of these four public cloud platforms at the end of the first quarter of 2017 can be seen in the Canalys chart below. The reasons these numbers are only approximate is that each of these vendors include (or exclude) different facets of their cloud business and each seek to ensure their growth remains opaque to the investor community.
However, Amazon reported its earning in April 2017 and showed revenue growing 43 percent in the quarter to $3.66 billion, an annualized run rate of some $14.6 billion.
Meanwhile, Microsoft (News - Alert) reported its cloud earnings in July 2017 and that its annualized revenue run rate was just under $19 billion. However, this includes a lot more than just IaaS and, once non-IaaS is removed, analysts suggest that revenue is likely at the $6 billion run rate. Google cloud business is even harder to separate but its cloud revenue was estimated to be some $1 billion at the end of 2015. Although it seems
to have hit its stride in the last year or so, it clearly has a lot of ground to make up. Current estimates are for approximately $2.5 billion in 2017. Lastly, IBM (News - Alert) is estimated to be of a similar size to Google but appears to have a lot less momentum than the others. And, based on the requests we hear from our customer base, IBM is not very often, if ever, referenced.
OK, so other than guessing the winners and losers, why does this matter? In my humble opinion, it matters because this scenario creates increased competition and competition is good for consumers. It’s also relevant as companies have a choice, and many are looking at more than one cloud platform, even if they have not yet done anything about it.
But what is really interesting, and what keeps many awake at night, is how much of this consumption is being wasted. You can think of this waste in terms of three main buckets:
- Always on means always paying – 44 percent of workloads are classified as non-production (i.e., test, development etc.) and don’t need to run 24×7
- Over provisioning – 55 percent of all public cloud resources are not correctly sized for their workloads
- Inventory Waste – 15 percent of spend on paying resources which are no longer used.
Combine these three buckets and you are looking at some estimated $6 billion in wasted cloud spend cloud in 2016, growing to $20 billion by 2020. Now that is something to really care about!
Few tools exist to actively monitor and manage this waste, and today there is not a cloud waste management industry per se. Currently, tech analysts tend to lump everything under ‘cloud management.’ This can and will change in the near future as cloud cost control becomes top-of-mind and the industry is able to leverage cloud computing growth statistics to calculate the massive scale of this industry problem. If you are in the cloud, this is definitely something to consider. Maybe you should think about optimizing cloud spend now (before your CTO, CIO or CFO asks you to do so).