Cloud Infrastructure Spending Rises Despite Economic Concerns

• Combined market share of Amazon, Microsoft, and Google reaches 65%.
• Dominance of these three companies even more evident in public cloud sector.
• IBM and Alibaba’s market shares decline over five-year period.

Despite clear economic concerns, recent Synergy Research Group data reveal a favourable upward trend in company spending on cloud infrastructure services.

Enterprise spending on cloud infrastructure services was $64.8 billion worldwide in the second quarter of 2023, up $10 billion from the same period in 2022 and the third consecutive quarter of increase despite budget constraints.

The numbers also reflect favourably on Microsoft and Google, both of which have consistently increased their market share over the years.

Amazon’s market share remained stable, with its cloud business accounting for little under one-third of cloud spending. Microsoft and Google measured 22% and 11%, respectively, bringing the aggregate share of the three leaders to nearly two-thirds (65%).

The three companies’ dominance is even more obvious in the public cloud sector, where they account for 72% of the market, according to Synergy.

At the same time, a five-year window shows that IBM’s share has continued to fall, while Alibaba’s share has also fallen, despite a surge in 2021.

Analysts attribute the recent drop in growth rates to “macroeconomic pressures, some belt-tightening by enterprises, local market issues in China, and… the law of large numbers,” but other factors could be at work as well.

Many businesses have been looking to (and now able to) construct their own AI solutions in recent months, notably in the first half of 2023. While many people prefer -aaS options, others want to buy their own hardware, including industry-leading and pricey processors, which may have caused cloud spending to fall.

Looking ahead, Synergy expects current “short-term” obstacles to be resolved and growth to continue for some time.

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