Global Cloud Service Expenditure Set to Rise in 2023

- Advertisement -
- Advertisement -
  • The top three in 4Q22AWS, Microsoft Azure and Google Cloudcombinedly grew 26%, accounting for a 65% share of total customer spend: Canalys
  • The quarterly growth rate slowed to 23% in Q4 2022, down from 34% in Q1 2022
  • Enterprise demand for cloud services will stay; the growth rate for cloud infrastructure services is expected to slow for the coming few quarters

According to a recent report by Canalys, the total spend on cloud infrastructure services around the world grew 23% year on year in Q4 2022 to reach $65.8 billion, a jump of $12.3 billion. For the full-year 2022, the cloud infrastructure services expenditure rose 29% to $247.1 billion. Notably, this expenditure was $191.7 billion in 2021. The report opined that the increasing public cloud costs, fueled by inflation and macroeconomic uncertainties, are forcing enterprise customers to optimize public cloud spend after constant IT investment over the past three years in digital transformation.

The research specified that the realities of worsening macroeconomic conditions and the looming recession prompted a slowdown in the volume and pace of migration to the cloud in Q4, especially by enterprise customers, which typically have larger workloads.

With the estimates that enterprise demand for cloud services will hang on while the growth rate for cloud infrastructure services will continue to slow for the next few quarters, Canalys expects global cloud infrastructure services spending to grow by 23% for the full 2023, compared with 29% in 2022.

- Advertisement -

A Research Analyst with Canalys, Yi Zhang pointed out, “Enterprise customers are responding to higher cloud prices and higher-than-expected operating costs under the tough macroeconomic conditions. Customers that are currently on pay-per-use billing models will optimize cloud activities to reduce cloud consumption and save costs. There will also be a considerable slowdown in the take-up of cloud contracts, which will also result in a decrease in associated cloud revenue.”

Market Leaders

Growing by just 20% on an annual basis, AWS nonetheless topped the cloud infrastructure services market this quarter, with 32% of the total spend. Canalys estimated that the decline of enterprise customers’ spending, combined with rising server energy and operating costs, resulted in an increasingly negative impact on its profitability. But, stated Canalys, AWS continues to actively invest in its channel ecosystems to expand its reach and acquire new customersits new customers this quarter include Nasdaq, Yahoo and Descartes Labs.

Coming next on the list, Microsoft Azure seized 23% of the global cloud infrastructure services market after growing 31% year on year. Though witnessing moderated consumption growth in Azure, Canalys estimated its revenue to be steady as its backlog commitment grew to $189 billion in Q4 2022. The report said that Microsoft is also placing a big bet on AI as a driver of Azure growth, following its announcement as the exclusive cloud provider for OpenAI to run its AI services including ChatGPT.

Google Cloud took away 10% of the market and stood third in the list. The report mentioned that Google Cloud continues to report operating losses, but losses were reduced. With a growth of 36% year on year, its differentiated products and focused go-to-market strategy are helping to drive customer momentum.

Canalys VP Alex Smith believes that customers are rethinking how they use the cloud in their business operations. He said, “In some cases, there is a natural slowdown in computing demand as core operations see less activity. In addition, conservative budgeting among businesses will lead to less experimentation during the next 12 months.”

Canalys is an independent analyst company which delivers smart market insights to IT, channel and service provider professionals around the world. Canalys’ PC Analysis service provides quarterly updated shipment data. Here, cloud infrastructure services refer to those that provide infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared public infrastructure. This excludes software-as-a-service expenditure directly but includes revenue generated from the infrastructure services being consumed to host and operate them.


 

- Advertisement -

Related Artcles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Exclusive

Indian PC Market Grows 4% In Q4 2023, Local Manufacturing Efforts Ramp Up

0
IT procurement by enterprises and SMBs, delayed in the first half of 2023, is starting to take place and is expected to accelerate...

“Efficiency In Solar Energy Is More About Investment Rationale Than Resource Limitation”

0
Indian utility-scale solar company SolarArise claims to offer investors long-term, cash-generating assets and anticipates advancements in energy storage technologies to enable 24-hour clean power...

A New Form Factor Of Two Wheelers Takes Shape In India

1
The logistics sector has become India's biggest adopter of electric vehicles. However, attrition due to physical and mental fatigue is alarming for lease and...

Buzz

Garuda

Garuda Aerospace Unveils Trishul Border Patrol Surveillance Drone

0
As the government has banned importing drones, Trishul aims to add to homegrown national security.  Garuda Aerospace, Indian drone-tech firm, has launched the Trishul Border...
Dronamics

BRINC Introduces Unified Drone Management Platform LiveOps

0
LiveOps integrates hardware features into a unified platform. The platform enables direct video streaming from BRINC devices for informed decision-making. It provides tools...
UXL foundation

UXL To Hit The Force Behind NVIDIA’s AI Dominance, CUDA

0
Efforts to dethrone NVIDIA are ramping up. The UXL will finalise technical specifications in the first half of the year and mature the...

Important Sectors

Dronamics

BRINC Introduces Unified Drone Management Platform LiveOps

0
LiveOps integrates hardware features into a unified platform. The platform enables direct video streaming from BRINC devices for informed decision-making. It provides tools...

Indian Government To Review Laptop Import Management System

0
The government recognises that setting up or expanding manufacturing units takes time, but there must be enough effort from companies’ end to assure compliance...
green hydrogen

Sterling And Tecnicas Reunidas To Set Up Hydrogen Electrolysers In India

0
Bilateral relations between India and Spain are growing in the clean energy sector. The Spanish firm will boost green hydrogen production in India. India’s...

Porsche E-Bike Performance Boosts IT Efficiency With Freshworks’ AI Software

0
Utilising the automation features and bots within Freshservice, the Porsche subsidiary streamlined and expanded its IT service to enhance the employee experience. Freshworks Inc. announced...

Intel, Biden-Harris Administration Reach Preliminary $8.5 Billion CHIPS Act Funding Deal

0
The proposed funding, along with an investment tax credit and eligibility for CHIPS Act loans, would aid Intel in enhancing American semiconductor manufacturing and...

Manufacturing

JLR To Hire 250 Electrical Technicians For Future EVs

0
These new roles, part of a £15 billion investment, are in addition to 300 positions created last year by the British car maker. Jaguar Land...

Altmin India Partners With WMG To Advance Battery Tech

0
Altmin and WMG will collaborate to strengthen their global battery materials supply chain position by optimizing cathode materials and developing diverse cell designs across...

EVs To Cost Less Than Gas Vehicles by 2027, Says Gartner

0
Gartner predicts a faster decline in production costs compared to battery costs, which represent the most significant expense in an electric vehicle, accounting for...
MG

MG Motor To Set Up Battery Assembly Unit At Halol Facility

0
The company plans to investigate battery cell production in collaboration with external partners. Automaker MG Motor India is actively exploring the possibility of assembling and...

Servotech Boosts India’s EV Charging Infrastructure With Manufacturing Facility

0
The new facility is poised to start with an annual production capacity of 24,000 power modules and plan to scale up to 2.4 lakh...