Cloud Services to Reach $374 Billion in 2022 as AI and Machine Learning Flourish: IHS Markit

As artificial intelligence (AI) and machine learning deployments grow, cloud services are poised to benefit in a big way, according to a new report from IHS Markit.

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The cloud-as-a-service (CaaS) category is expected to grow 56 percent in 2018, with a five-year combined annual growth rate (CAGR) of 29 percent; while platform as a Service (PaaS) will grow 55 percent, with a five-year CAGR of 31 percent.

To grow market share, many cloud service providers (CSPs) are introducing specialized compute instances, which target data-intensive workloads and ease the integration of artificial intelligence (AI) and machine learning (ML) into enterprise business applications as a strategy to capture market share.

This type of activity is expanding the high-growth cloud-as-a-service (CaaS) and platform-as-a-service (PaaS) segments. The off-premises cloud service market is expected to reach $374 billion in 2022, at a five-year compound annual growth rate (CAGR) of 17.7 percent.

Innovative service offerings by CSPs are multiplying, including the introduction of blockchain technology in PaaS service offers. They are also introducing new services focused on enterprise verticals, including the following: healthcare, to aid diagnosis; energy, for oil and gas exploration; financial services, for transaction monitoring; and supply chain efficiencies in retail and government, for smart city infrastructure.

North America, the birthplace of off-premises cloud services, will remain the lead market through 2022, delivering approximately 53 percent of all global off-premises cloud service revenue.

IBM continued to lead the market for software-as-a-service (SaaS) in 2017, with 18 percent of revenue; Amazon led infrastructure-of-a-service (IaaS), with 41 percent of revenue; Microsoft topped the list for PaaS, with 26 percent of revenue; Microsoft’s lead in CaaS continued, with 21 percent revenue; and Equinix led the physical facility market, with 15 percent of revenue.

“Amazon made a smart move when it integrated Alexa into Amazon Web Services business applications -- and by launching several machine learning services, further expanding its breadth of intelligent solutions,” said Clifford Grossner, Ph.D., senior research director and advisor, cloud and data center research practice, IHS Markit. “Google and Cisco also upped their AI and ML game, targeting hybrid cloud deployments with a collaboration aimed at running these tasks, both on-premises and from Google Cloud.”

As certain market segments mature, consolidation continues for two reasons: buying competitors for access to their client base and expanding service portfolios.

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