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It’s a multicloud world: Dell Technologies embraces software innovation

Dell Technologies (NYSE: DELL) will undoubtedly face stiff competition on its journey to multicloud leadership. Building a simplified and unified multicloud environment remains an elusive concept for customers operating on a diverse set of platforms serving unique stakeholders. While by TBR’s own analysis, building a fully unified cloud experience for customers remains a distant goal for many vendors, Dell Technologies is taking steps in this direction by giving customers the tools to manage workloads running on Dell Technologies platforms more seamlessly and enabling customers to utilize Dell Technologies’ stack in tandem with public cloud. Success will hinge on Dell Technologies’ ability to scale partnerships, the speed at which Project Alpine initiatives ae rolled out to the market, and the company’s ability to win customers’ favor in leveraging Dell Technologies’ SaaS platforms for multicloud management.

Dell Technologies unveiled a series of multicloud initiatives, with software taking center stage

Jeff Clarke, vice chairman and co-chief operating officer for Dell Technologies, opened Tuesday’s keynote by pointing out that software innovation across the industry is consistently outpacing hardware innovation. This theme resonated throughout the event, which focused on Dell Technologies and partner capabilities that can marry on-premises and public cloud data, automate IT management tasks and enhance security. Dell Technologies is building an ecosystem around its ISG portfolio that can increase the value of its own software and tools, particularly in the storage space.

ISG has performed competitively versus market peers over the past year, growing 4% year-to-year in 2021 to $34 billion in annual revenue. Although much of the product emphasis during Dell Technologies World focused on storage innovations, recent ISG growth has predominantly been driven by the server and networking business, which was up 4% in 2021, while storage has remained flat, partially due to marketwide challenges around securing components. Dell Technologies’ leadership position in the storage market is a key advantage for the company and is important to protect, particularly as competitors such as Pure Storage (NYSE: PSTG) and NetApp (Nasdaq: NTAP) have intensified their focus on hybrid cloud storage solutions via partnerships with major hyperscalers.

APEX and Project Alpine announcements focus on data protection and multicloud capabilities

The primary service expansion announced for Dell Technologies APEX, Dell Technologies’ portfolio of cloud and IaaS offerings, was Dell Technologies APEX Cyber Recovery Services. This managed service provides day-to-day management of cyber recovery vault operations and assistance with data recovery should a cyberattack occur — valuable capabilities that help customers not only deal with ever-increasing ransomware threats but also fill in gaps for customers whose IT teams lack the capacity and expertise to address security issues.

Dell Technologies also expanded its partnership with Amazon Web Services (AWS)(Nasdaq: AMZN), announcing CyberSense for Dell Technologies PowerProtect Cyber Recovery for AWS, which adds AI and machine learning-based monitoring of files to determine if a cyberattack has occurred as well as applies post-attack forensics to identify the customer’s last good backup copy.

While Product Group VP Caitlin Gordon noted that Dell Technologies is not new to hyperscale partnerships, with 1,500 companies already using Dell Technologies Data Protection on AWS, expanding the breadth of the company’s partnerships to include more services and a larger number of cloud providers is essential to address a more robust number of customer use cases. Gordon stated that the Dell Technologies PowerProtect Cyber Recovery Service, which was launched with AWS in 4Q21, will be available on Microsoft Azure in the second half of 2022.

Dell Technologies’ Project Alpine, introduced in January, encapsulates the company’s efforts to make more of its software available on public clouds. Project Alpine will make Dell Technologies’ block and file storage software available on public clouds to give customers a unified experience managing and moving workloads between their on-premises Dell Technologies infrastructure and public clouds. Gordon provided an update on the progress of Project Alpine, noting that customers will be able to access the same Dell Technologies management tools they are already familiar with via a SaaS interface to move data between environments. Project Alpine is a key step in not only increasing the appeal of Dell Technologies’ storage portfolio but also remaining competitive against storage peers that are taking a similar approach to cloud alliances, such as Pure Storage Cloud Block Store, Azure NetApp Files and Amazon FSx for NetApp ONTAP.

Dell Technologies lands the first on-premises partnership with Snowflake

Dell Technologies is the first hardware vendor to announce a partnership with Snowflake (NYSE: SNOW), a data warehouse company popular among public cloud users for analyzing and managing their company data. With this new partnership, Dell Technologies customers will be able to bring their on-premises data sets into the Snowflake cloud alongside public cloud data sets, a capability that is currently not available for other vendors’ on-premises systems. This type of partnership is an example of how Dell Technologies is expanding customer choice and the capabilities of its platforms, a trend that is likely to continue as Dell Technologies grows its partner roster and perhaps begins to ramp up acquisitions following the spinoff of VMware (NYSE: VMW) in late 2021.

Storage updates focus on software innovation
Dell Technologies focused on the software innovation theme as it highlighted improvements to its storage portfolio, which includes PowerMax, PowerStore and PowerFlex. For the enterprise PowerMax storage product line, Dell Technologies emphasized the zero-trust architecture and increased intelligence and automation, which reduces NVMe-over-TCP setup time by 44% and guarantees a 4:1 data reduction ratio. Dell Technologies highlighted a more SaaS-based approach for its midrange PowerStore operating system software, rolling out version 3.0 to customers free of charge with 120 new features.

Dell Technologies commits to making its products developer-friendly

Perhaps one of the most critical aspects of gaining share in multicloud environments for Dell Technologies will be winning over developers, an audience that has been more of a tangential focus for Dell Technologies in the past as its historical customer base has been rooted in infrastructure managers. In his keynote address, CEO Michael Dell noted the company is focused on making its solutions API-driven, increasing levels of automation and supporting Kubernetes platforms like VMware’s Tanzu and Red Hat’s OpenShift in addition to AWS EKS, which is available on Dell EMC VxRail and PowerStore.

Dell Technologies CIO and chief digital officer Jen Felch went on to discuss how the company has applied these principles to its own IT department. Dell Technologies focused on its own developer experience by creating self-service infrastructure through automation of virtual machine provisioning, networking and container deployment, in addition to providing developers with increased cost transparency to help them make more informed decisions. This was orchestrated through the Dell Technologies Developer Cloud, a user interface utilized by Dell Technologies’ developer and infrastructure teams. Per Dell Technologies’ own internal audit, enabling a self-service infrastructure helped the company’s developers increase their time spent on software development (versus administrative tasks) from 20% to 75%, a success point that Dell Technologies believes it can help its customer base achieve. Dell and Felch did not comment on what the company is doing to cultivate a Dell developer community, which will be another critical element to driving participation in the Dell ecosystem.

While multicloud took center stage, PC innovations highlighted collaboration and security

Dell Technologies’ PC business has been fueling the company’s revenue growth, with the Client Solutions Group (CSG) growing 27% year-to-year in 2021 to $61 billion in revenue, while also supporting strong margins. Highlighted PC innovations focused on the top end of Dell Technologies’ portfolio, for both business laptops and the Alienware gaming line, with a theme of collaboration, connectivity and security. Dell Technologies showcased a prototype of its Latitude 9330 laptop featuring buttons built into the trackpad to manage virtual conferencing functions such as turning the camera and microphone on and off, chatting, and sharing content. The PC also leverages AI-based features such as fixing videoconferencing performance issues by connecting to multiple networks simultaneously to increase bandwidth. From a privacy and security standpoint, the PC can detect whether onlookers are viewing the user’s screen and obscures the content from view.

Aside from innovations centered on user experience, Dell Technologies showcased the company’s focus on sustainability in PC design via Concept Luna, a three-pronged approach to reducing the carbon footprint of PCs by decreasing the size of components such as motherboards, intentionally choosing eco-friendly materials, and designing PCs to be more serviceable, which facilitates repairs and refurbishment.

Conclusion

Dell Technologies World 2022 illustrated Dell Technologies’ intentions to enable a multicloud ecosystem for its customers. The company is taking a broader approach, rather than relying solely on its APEX “as a Service” portfolio to drive growth, by embracing partnership opportunities with public cloud vendors and turning its attention toward meeting the needs of developers who are consuming vast amounts of infrastructure services. Partnerships are also a focal point for building a broader ecosystem. While Dell Technologies’ relationship with VMware remains close, the company’s first major event since the VMware spinoff gave Dell Technologies greater opportunity to highlight a broader range of partnerships, including its new alliance with Snowflake and in support of customers using OpenShift. The multicloud messaging throughout the event demonstrated that Dell Technologies understands its customers’ most essential market needs, and now the company must focus on executing to meet those demands, particularly through Project Alpine and by expanding its strategies to better cater to developers.

Aiven’s managed services capabilities bring the best of open-source data technologies to multicloud enterprises

With a core portfolio of platform services, Aiven meets the needs of developers, partners and the cloud-native enterprise  

Aiven was founded in 2016 by a team of open-source and cloud experts based in Helsinki who sought to develop a data management platform that capitalizes on the needs of more mature customers who are increasingly leveraging open-source software. As such, many of Aiven’s clients come already knowing what they want in terms of stream processing frameworks, databases, search engines, visualization and analytics. The core driver of value is Aiven’s ability to orchestrate data on a single management platform, which entails getting customers up and running with minimal deployment lag and enabling the integration with existing tool sets on any cloud. The dedication to a robust support model and transparent pricing with lower costs than many competitors are additional underlying factors that position Aiven to continue growing on pace with the expanding Database as a Service market (DBaaS); for reference, in just the last eight months the company has doubled in size to about 150 employees and is backed by a strong venture capital engine, including the company’s latest round of Series C funding worth $100 million, as well as solid new and recurring revenue streams.

Despite coopetive dynamics, Aiven benefits from allying with leading hyperscalers to support clients’ need for multicloud

As multicloud is a core component of its value proposition, Aiven provides customers availability by partnering with all three major cloud service providers (CSPs), including Amazon Web Services (AWS) (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT) and Google Cloud (Nasdaq: GOOGL). In addition to Aiven’s services being made publicly available on the marketplaces of both Google Cloud and AWS, these relationships allow Aiven to provide enterprises with a way to build the services and applications that are enabled by databases on leading public cloud infrastructures, as well as offer a simple migration path for legacy customers. TBR notes that over 10% of Aiven’s customers are provisioning different services to multiple clouds and that many of Aiven’s adopters come knowing specifically which databases or monitoring tools they want to use and where they want to deploy them. While many customers often start with a preferred cloud partner, they ultimately seek to expand to other platforms for greater development autonomy and to avoid vendor lock-in. As a result, TBR believes Aiven’s role as an orchestrator for multiple database services across clouds positions the company uniquely in the market, as Aiven provides customers the degree of neutrality and third-party support required to navigate and manage various dispersed open-source projects.

However, as Aiven offers nine core services — including the widely deployed open-source platform tools Apache Kafka, PostgreSQL, MySQL, Cassandra, Redis, Elasticsearch, InfluxDB, M3 and Grafana — there is a large degree of coopetition as Aiven’s partners offer related services on their clouds and, in some cases, the clouds of other CSPs. The increasingly open, hybrid multicloud approaches of vendors like Google Cloud and even IBM (NYSE: IBM) will prove competitive, yet TBR believes Aiven still challenges its partners when it comes to enabling open-source innovation and helping enterprises deliver this innovation at scale. Meanwhile, as customers increasingly look for a partner to avoid vendor lock-in, Aiven is well positioned to challenge many vendors that trail the market in providing a degree of vendor-agnosticism.  

Open-source technology has become less of a value differentiator and more of a foundational attribute that customers in the cloud database market have come to expect. Vendors in the space must now embed other feature sets and functionality to stand out and navigate the common challenges faced when it comes to modern app development and operational management in the cloud. However, customer expectations go beyond avoiding vendor lock-in, one of the known benefits of open-source technology, to include reducing TCO while improving time to market, security and reliability. Aiven is a managed cloud database services vendor that delivers a unified data platform for both traditional and cloud-native customers looking to deploy data architectures seamlessly and across multiple clouds. By capitalizing on managed cloud services, Aiven has created a way for customers to build, deploy and manage various open-source database management and analytics tools in a self-service manner. With a variety of deployment methods available to customers in conjunction with the benefits of automated security, scalability and resilience, Aiven has demonstrated this value proposition by building a customer base that crosses multiple industries and highlights both customer-facing and back-office analytics use cases.

Cloud professional services revenue grows by double digits as pandemic increases demand for cloud migration

Cloud professional services market summary

Market overview

In the most recent iteration of TBR’s Cloud Professional Services Market Forecast, we projected the market would grow at an 11.7% CAGR between 2019 and 2024 as vendors balance the effects of COVID-19 with rapid growth in digital transformation. Opportunity for benchmarked vendors comes from the large number of customers still operating on premises, which leads to the need for advisory, consulting and implementation services, as plans to shift to the cloud come to fruition. Additionally, the pandemic will likely have many businesses reevaluating their IT road maps, causing an inevitable uptick in cloud adoption. As a result, cloud managed security and application services, especially during a new working-from-home reality, will prove opportunistic for benchmarked vendors. Meanwhile, for existing cloud users, the need for hybrid and multicloud environments will necessitate ongoing integration and management needs from technology-neutral vendors.

Market disruptors

Changes in general purchasing habits brought on by the COVID-19 pandemic have proved disruptive for many professional services vendors; however, the market is expected to rebound quickly as customers replace legacy IT systems with cloud solutions. As a result, managed cloud services is expected to be the fastest-growing subsegment of the cloud professional services market, especially as hybrid IT sprawl intensifies. However, some other submarkets, primarily application development and maintenance, will feel some pressure from automation, especially as adoption of cloud-native technologies rises and plays a role in suppressing labor-driven resources.

TBR’s Cloud Professional Services Benchmark covers the professional services that are critical to enabling customers to take advantage of available technology as well as the market opportunity that exists for firms that cater to service needs. Additionally, the benchmark analyzes the size, growth and leading providers of services around cloud environments.

Rising cloud adoption and associated complexities present opportunities across service lines

Changes in general purchasing habits brought on by the COVID-19 pandemic have proved disruptive for many professional services vendors; however, the market is expected to rebound quickly as customers replace legacy IT systems with cloud solutions. As a result, managed cloud services is expected to be the fastest-growing subsegment of the cloud professional services market, especially as hybrid IT sprawl intensifies. However, some other submarkets, primarily application development and maintenance, will feel some pressure from automation, especially as adoption of cloud-native technologies rises and plays a role in suppressing labor-driven resources.

Wave of growth that will outpace prior estimates expected for cloud professional services market

Cloud professional services market overview

Market overview

Prior to the COVID-19 outbreak, the increasing complexity of enterprise hybrid and multicloud environments had already established a growing need for managed services and system integration vendors. Traditional deployment schedules and delivery timelines have been accelerated as the pandemic has created a short-term need to fulfill the demands of a new work-from-home reality, especially in the realm of security and privacy. The increased demand for cloud professional services will necessitate both immediate and ongoing advisory and implementation services as the pace of multicloud and hybrid cloud adoption will increase rapidly for many enterprises needing advisory and implementation services.

TBR’s Cloud Professional Services Benchmark covers the professional services that are critical to enabling customers to take advantage of available technology as well as the market opportunity that exists for firms that cater to service needs. Additionally, the benchmark analyzes the size, growth and leading providers of services around cloud environments.

Amid rise of Kubernetes as standard in cloud-native deployment, vendors vie to be leading hybrid enablers

Startups seek differentiation in an escalating market with niche, data-friendly tools

While many industry incumbents are taking the fast-paced Kubernetes market by storm, TBR argues the overall market is still in its infancy, leaving ample room for vendors to position their offerings as unique to developer customers. In a room filled with ambitious startups, Humio emerged as a standout due to its enterprise-grade partnership with IBM and impressive scale for a short-lived solution.

Humio streamlines visibility for on-premises and cloud-native environments, easing pressure on developers

Founded in 2016, Humio offers an index-free logging platform for on-premises and cloud environments that processes large data volumes in real time, providing users with greater visibility into both structured and unstructured data. While many competing vendors market public clouds as the home to their streaming technologies, Humio views its on-premises tool as a differentiator given that data challenges, particularly ingestion and investigation, impact legacy customers. TBR believes one of Humio’s distinguishing features is its unlimited pricing plan, which was launched over one year ago. Contrary to a “pay as you scale” model, Humio’s unlimited option flattens the cost curve when customers incur higher data volumes, helping users save on data ingestion and retention costs. While still in its early stages, Humio’s offering, as well as those from other vendors that follow the same pricing model, may end up disrupting the market.

Looking to technology and reseller partners for early entry

An indirect sales strategy is critical for startups, and Humio looks to both technology and reseller partners for success; ahead of the event, Humio entered into an integration and reseller partnership agreement with IBM. IBM now supports Humio’s logging tool on its recently launched Cloud Pak for Multicloud Management — in this instance, Humio’s tool runs as a SaaS offering in the IBM Cloud, where Humio will monitor data health and notify users of issues, all while being simplified for end users via the one-click deployment that the IBM Cloud Paks provide. TBR believes IBM’s backing of Humio’s platform, despite being newer to market, highlights the validity of the technology in its early stages, and we predict that through the IBM Cloud Paks, which are based on Red Hat’s OpenShift platform, Humio will be successful in scaling its offering.

Year in review: Shifting from a monocloud to a multicloud and hybrid cloud landscape

2019 has been a notable year for the cloud and software markets, shedding light on the cloud landscape as it becomes progressively complicated. From customers’ increasingly complex use cases to vendors’ sustained but slowing growth, along with acquisitions, new challengers and new ventures, the market continues to transform.

Join Allan Krans, Meaghan McGrath, Jack McElwee and Catie Merrill from TBR’s Cloud and Software team as they recap the most salient events of 2019 and look ahead to what those changes hold for the coming year. 

Don’t miss:

  • Shifts in cloud consumption
  • Cloud vendor adaptations
  • Expectations for 2020

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Embedding multicloud and software-driven services in portfolios helps vendors execute on strategy, expand addressable markets

Google Cloud revenue surpassed the $2 billion mark in 2Q19, doubling in size in six quarters. Under the guidance of CEO Thomas Kurian, Google Cloud is improving its enterprise appeal by launching its multicloud management tool set, Anthos; leveraging acquisitions to build out its migration, storage and analytics capabilities; and expanding its global sales and delivery capacity. Similarly, Salesforce complements internal innovation around solutions such as Customer 360 with ongoing acquisition activity and investment in its partner network. TBR estimates the vendor attained $3.95 billion in revenue as sales teams expanded single-product customer engagements, many of which are led by Service Cloud, into multiproduct deals.

Additional assessments publishing this week from our analyst teams

Capgemini continues to gain momentum in cloud services, with cloud revenue driven by offerings in the Capgemini Cloud Platform portfolio, which supports clients when building, migrating and managing applications and infrastructures in cloud environments. By delivering a cloud-first option, Capgemini enables enterprise and public sector clients to become agile through offerings related to data center modernization, cloud-native solutions, application modernization, intelligent applications, and emerging technologies such as IoT, blockchain and AI. Offering each client its entire portfolio enables Capgemini to provide holistic transformational solutions and effectively compete with peers. Elitsa Bakalova, Senior Analyst

TBR’s Public Sector IT Services Research practice will publish its 2Q19 ManTech report this week.  With top-line revenue expanding 9.4% year-to-year to $537 million, ManTech should be one of the top-performing vendors in 2Q19 in terms of sales growth. ManTech’s top-line expansion owes largely to accelerating spend among classified customers in the Department of Defense (DOD) and Intelligence Community that are increasingly engaging ManTech to enhance warfighting capabilities across all domains, but particularly in space and cyber. ManTech’s addressable market is set to expand and diversify into the civilian sector as the integration of Kforce Government Solutions (KGS) continues. KGS will add 500 employees with large-scale IT infrastructure modernization and transformation expertise, primarily with the Department of Veterans Affairs, to ManTech, while contributing roughly $100 million in revenue (based on revenue of $98 million reported by KGS in 2018). Inorganic sales will largely accrue in ManTech’s Mission Solutions and Services segment, where the core customer focus is the DOD, the Department of Homeland Security and federal health agencies. Look for TBR’s 2Q19 Perspecta report next week, as we examine how the company is leveraging its R&D-led approach to maintain its growth momentum as it begins its second full year as an independent, federal IT competitor. John Caucis, Senior Analyst

Weakness in Cognizant’s core industry segments overshadowed increased growth in digital in 2Q19. The company’s ability to rapidly scale its digital revenue will be key to offsetting this weakness, specifically in Financial Services and Healthcare. In the near term, Cognizant must emphasize cross-sales of acquired assets, such as Zenith Technologies, within its existing and acquired install bases. Kelly Lesiczka, Analyst

Streamline and extend: IBM’s play for what it calls ‘hybrid multicloud’ or ‘Chapter 2 of the Cloud’

IBM will use OpenShift to bring a consistent cloud value proposition, remaining agnostic toward delivery method, location or cloud provider

In 2015 Red Hat’s CEO made a statement at an analyst day presentation that Red Hat aimed to do to the PaaS layer with OpenShift what it had done to the enterprise operating system layer with RHEL. That strategy was thoroughly validated with IBM’s acquisition of Red Hat. At the core of the IBM Cloud Summit were discussions of how OpenShift was the only platform layer capable of running on multiple clouds, in what IBM describes as hybrid multicloud. In IBM’s definition, hybrid denotes the ability to run applications on premises, in private clouds, in public clouds and at the edge. Multicloud denotes the ability to mix and match different cloud providers across the hybrid continuum. Many vendors can deliver single brand — or monocloud — hybrid that is a new version of vendor lock-in. IBM asserts OpenShift is the only cloud operating system and development layer that can enable customers to code once and deploy on any form factor from any technology vendor.

Stefanie Chiras, VP and general manager of the RHEL Business Unit, articulated the central Red Hat value proposition as being an enterprise software company with an open-source development model. Involved in a variety of different open-source projects, Red Hat monitors these myriad projects, filtering the most powerful innovations from these upstream contributions into the RHEL operating system before hardening these projects into enterprise-grade products and adding the necessary security and DevOps deployment features needed for large enterprises.

This hardened curation of open-source community projects has seen Kubernetes container management rapidly emerge as a de facto deployment standard, which has Linux as the underpinning operating system. OpenShift stitches RHEL and Kubernetes together with additional development services, and IBM will pivot all its software into cloud-native deployment models resting on top of this foundation to enable the software to run anywhere its customers require.

IBM bets on Cloud Paks to simplify application modernization migration to the cloud in what it calls the ‘second chapter’

IBM’s point of view is that the cloud is entering its second chapter. In the first chapter, which has been the last 15 years, enterprises have moved some development and some customer-facing applications to the cloud, but the deep back-office systems of record have remained on premises for a variety of reasons, including the technical debt of the custom applications, as well as concerns around security and compliance.

Cloud Paks are the manifestation of three to five years of ongoing development work to refactor their monolithic middleware applications into containerized, cloud-ready services. From a packaging standpoint, the Paks simplify the sprawling IBM middleware portfolio into pre-integrated solutions that address the most pressing challenges to cloud migration and operations. All Cloud Paks sit atop RHEL and OpenShift, with IBM promising “single button push deployment” when running applications on the IBM Cloud. Being underpinned by RHEL and by OpenShift maintains infrastructure independence and enables enterprise customers the ability to choose any vendor cloud or underlying on-premises infrastructure to run these applications anywhere.

The IBM Cloud Summit 2019 combined several main IBM initiatives into a full day of executive presentations for the analyst community. IBM’s presentations on strategy and innovation centered on the opportunity to migrate 80% of the workloads still run by traditional IT delivery methods to the cloud. IBM’s legacy strengths, combined with more recent investments, make the company well suited to help customers address the remaining 80% of IT workloads, most of which are mission critical. IBM’s recent landmark investment was the purchase of Red Hat, and IBM laid out in even greater detail how that will benefit customers. This was followed by a series of presentations taking aim at the untapped market opportunity as well as the various middleware services and professional services IBM can bring to bear on the application migration and modernization efforts for its customers resting on the foundational elements of Red Hat Enterprise Linux (RHEL), Red Hat OpenShift and Kubernetes container management clusters.

Operators are partnering more deeply with webscales to support multicloud and hybrid environments

Combined Cloud as a Service revenue for telecom operators in Technology Business Research, Inc.’s (TBR) 4Q18 Carrier Cloud Benchmark rose 13.2% year-to-year in 4Q18, primarily due to investments in new data centers and portfolio expansion in growth segments such as SaaS and hybrid cloud. All benchmarked companies sustained year-to-year Cloud as a Service revenue growth as significant opportunity remains for carriers to target businesses seeking greater cost savings, scalability and efficiency by migrating traditional infrastructure and applications to the cloud.

Combined IaaS revenue among benchmarked companies rose 11.2% year-to-year, driven by portfolio expansion and data center investments to reach customers in new markets. IaaS revenue growth will decelerate over the next several years, however, as operators increasingly emphasize supporting in-demand IaaS solutions from third-party providers such as Amazon Web Services (AWS) (Nasdaq: AMZN) and IBM (NYSE: IBM) over first-party IaaS platforms.

Other Cloud (which includes SaaS, PaaS and BPaaS) revenue rose 16.8% year-to-year, driven by the adoption of services including unified communications, CRM and office productivity solutions. Operators are capitalizing on the demand for SaaS and PaaS applications by cross-selling the solutions with IaaS platforms and other network services.

The bulk of revenue is being generated in APAC and EMEA as local operators benefit from data sovereignty laws that require cloud data be stored in local data centers, which is slowing the momentum of U.S.-based webscale providers. The Americas accounted for only 15% of Cloud as a Service revenue in 4Q18, as AT&T and Verizon are no longer competing in the IaaS market and Asia- and Europe-based operators are primarily targeting foreign-based multinational customers with operations in the Americas.

Graph showing 4Q18 total Cloud as a Service revenue

TBR’s Telecom Practice provides semiannual analysis of Cloud as a Service revenue in key segment splits and regions for the top global carrier cloud operators in its Carrier Cloud Benchmark. Operators covered include Bharti Airtel, British Telecom, CenturyLink (NYSE: CTL), China Telecom, Deutsche Telekom, Korea Telecom, NTT, Orange, Singtel, Telefonica (NYSE: TEF) and Vodafone (Nasdaq: VOD).