Demand Surges for IaaS Cloud Networking

By Greg Tavarez, TMCnet Editor  |  July 28, 2023

Cloud environments and modern application architectures continue to advance. As a result, businesses look to construct and fortify their network infrastructure to be more agile, flexible, resilient, elastic and scalable. The solution for this is Infrastructure as a Service, or IaaS, networking.

IaaS networking grants businesses unparalleled agility through real-time provisioning and configuration, enabling seamless adaptation to ever-changing demands. Flexibility remains a hallmark of these cloud-based solutions, facilitating effortless scalability to cater to fluctuating requirements and optimize costs.

In times of challenges, redundancy and failover mechanisms ensure unwavering resilience, guaranteeing uninterrupted operations. Additionally, automatic resource scaling based on demand brings the coveted elasticity that modern businesses seek, culminating in a comprehensive and dynamic network infrastructure seamlessly aligned with the digital era's fast-paced rhythm.

IaaS cloud providers recognize the importance of networking to their customers and have invested heavily to expand their dedicated IaaS networking solutions. Because of the investment being put into IaaS networking solutions, IDC estimates that worldwide revenue for public cloud-based IaaS networking services will reach $19.4 billion in 2023. The market is expected to see strong growth through 2026 with a compound annual growth rate of 27.9% for the period from 2022 to 2026.

According to IDC (News - Alert), the largest segment of the IaaS networking market is cloud connects/interconnects, which accounts for more than half of all revenue and is forecast to expand at a 21.1% CAGR. Cloud connects/interconnects enable seamless and direct connections between an organization's on-premises infrastructure and cloud service providers. It facilitates a reliable and secure link between private data centers and the various cloud platforms where businesses host their applications and data.

The second-largest technology segment, cloud WAN, is also forecast to be the fastest-growing category with a five-year CAGR of 112.3%, according to IDC. IaaS service meshes will see strong growth as well, with a CAGR of 68.2% while ADCaaS and cloud VPNs will experience more modest growth with CAGRs of 17.5% and 11.8% respectively.

"Cloud connects/interconnects are foundational to every cloud strategy as these make it possible for enterprises to quickly and securely connect their on-premises and edge environments to IaaS providers. The rise of multicloud and SaaS (News - Alert) applications that meet the demands of the modern distributed workforce in enterprises is the driver of rapid growth in cloud WANs and other IaaS network services," said Rohit Mehra, Group Vice President, Network and Telecommunications at IDC.

Additionally, IDC found the top five vendors in the public cloud IaaS market. The top five are Amazon Web Services, Microsoft (News - Alert), Google, Alibaba and Tencent. Combined, these providers accounted for 85.7% of the total market spend in 2022 with AWS capturing more than half the total.

Edited by Alex Passett
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