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TBR launches semiannual Cloud Infrastructure & Platforms Benchmark

As workloads become the most important driver of cloud adoption, TBR’s Cloud Infrastructure & Platforms Benchmark takes an in-depth look at the infrastructure (IaaS) and platforms (PaaS) markets.

IaaS is about scale; PaaS is about differentiation

Join Practice Manager Allan Krans and Senior Analyst Catie Merrill Thursday, April 21, 2022, for a review of TBR’s latest Cloud Infrastructure and Platforms Benchmark, including in-depth views of the IaaS and PaaS markets and how vendors are competing to address opportunities in emerging submarkets such as app development and integration. Our team will look at the cloud market through the lens of platform and infrastructure workloads and highlight leading vendor strategies that are driving the next wave of cloud adoption.

Don’t miss:

  • IaaS and PaaS revenue and growth leaders
  • A review of cloud ecosystems and go-to-market strategies
  • Customer behavior driving vendors’ investment

Mark your calendars for Thursday, April 21, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.

Related content:

  1. Top 3 Predictions for Cloud Infrastructure & Platforms in 2022
  2. Cloud Infrastructure & Platforms Benchmark
  3. Russian aggression will not dampen pandemic-driven cloud demand

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Top 3 Predictions for Cloud Infrastructure & Platforms in 2022

As vendors embrace open, hybrid architectures, PaaS emerges as the source of differentation

Vendors adjust strategies as clients ask for open and flexible IT

Customer demand for more open, cross-cloud services will shape vendor investments through 2022. Vendors traditionally known for locking customers in to their technology, including IaaS incumbent Amazon Web Services (AWS), will likely re-evaluate their portfolios and go-to-market messaging in the coming year. This could have lasting impacts on peers such as IBM and Google Cloud, which use openness as a competitive differentiator. For example, this past year AWS took a big leap forward with the general availability of EKS (Elastic Kubernetes Service) Anywhere, which allows customers to create and manage Kubernetes clusters inside their data centers.

Along with Outposts, AWS markets EKS Anywhere as part of its hybrid portfolio, which is typically just an extension of AWS cloud services to on-premises environments. However, for many competing vendors like IBM and Google Cloud, hybrid cloud has come to mean supporting customers’ workloads not only on premises but also across competitors’ clouds. AWS could similarly go down this route to better compete and may surprise the market in 2022 by offering EKS on other public clouds. Oracle is another example of a vendor known for confining customers to its cloud stack; yet, as Oracle looks to position itself as the No. 4 cloud leader in 2022, it could slowly embrace deployment methods outside Oracle Cloud Infrastructure (OCI). This trend is reflected in Oracle’s newer open-source application development and management platform, which is somewhat comparable to Red Hat OpenShift, and is expected to be deployable to third-party clouds.

2022 cloud infrastructure & platforms predictions

  • Hybrid remains the new norm
  • Bringing cloud to the customer: Distrubuted cloud moves from experiment to niche delivery method
  • IaaS is about scale; PaaS is about differentiation

Learn more in our webinar 2022 Predictions: Cloud

Send me a free copy of TBR’s Top 3 Predictions for Cloud Infrastructure & Platforms in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Cloud migration rises to top as central IT investment for driving IaaS and PaaS adoption

Cloud migration rises to top as central IT investment for driving IaaS and PaaS

Key Insights

The pandemic has laid bare the benefits of the cloud, serving as a proof point for the central role cloud plays in supporting organizations’ short- and long-term digital transformation road maps.

COVID-19 has dramatically accelerated the timeline for cloud adoption for many organizations, with public cloud as the most common method of delivery for IaaS and PaaS workloads.

The use of cloud professional services will continue to grow due to the challenges of migrating increasingly complex workloads to the cloud while working in a remote environment.

TBR’s Cloud Applications Customer Research tracks how customers are modernizing application environments and choosing between different cloud delivery methods. Leveraging in-depth conversations between TBR and enterprise customers, the Cloud Infrastructure & Platforms Customer Research provides subscribers with actionable insight that they can use to better understand their customers’ behavior and win cloud infrastructure deals. Topics covered for both reports include public, private and hybrid delivery options; decision-making involvement and criteria; leading vendor perception; field positioning and competition guides; and the impact of emerging trends (e.g., containers, security, platforms).

Vendors with hybrid strategies gain revenue opportunity

Hybrid deployments on the rise

Hybrid-influenced vendors are benefiting from instituting a vendor-agnostic approach, working with third-party vendors that offer cloud management tools and services. TBR expects IBM’s position in the hybrid market has been greatly strengthened since the company obtained a powerful integration layer for hybrid multicloud environments through the acquisition of Red Hat. However, other vendors like Microsoft, and now VMware, will challenge IBM’s PaaS-led approach going forward. As more vendors like VMware rapidly exit lower-margin software and instead battle for hybrid workloads, the competitive landscape will shift.

TBR’s Hybrid Benchmark helps providers of hybrid environments and their partners align to growing opportunity, highlighting the market size of hybrid-influenced public cloud, hosted private cloud and traditional software; the go-to-market strategies vendors are using to drive revenue in the hybrid IT space; gaps in the current ecosystems for enterprises; how vendors are addressing customers’ integration challenges; and more.

Trailing vendors collaborate to better compete against market leaders, which are expanding globally

Public Cloud Market Summary

Amazon Web Services (AWS) and Microsoft remain leaders in public cloud, but their cloud strategies are extending well beyond the segment as they also enable hybrid environments with internal hybrid cloud offerings such as Azure and Azure Stack that entice enterprises with latency-sensitive or regulated workloads to leverage cloud environments. Microsoft is improving its competitive position against AWS through partnerships, notably its direct data center connections with Oracle. Although only a limited number of regions support these direct connections currently, the Microsoft-Oracle partnership is expanding with new direct connections in Canada. However, AWS holds significant IaaS market share and remains the leading IaaS provider as of 4Q19.

While both vendors still offer IaaS, IBM and Google have taken unique approaches to winning enterprise customers through vendor-agnostic and Kubernetes-based PaaS. IBM holds a greater share of this market as it attained a strong IBM Cloud Private customer base prior to the launch of Anthos, and IBM’s acquisition of Red Hat grew IBM’s position in the space. TBR expects that both IBM and Google will be successful with this vendor-agnostic strategy as many enterprises look to leverage Kubernetes-based PaaS for their hybrid environments, evidenced by IBM’s customer base of more than 2,000 clients using Red Hat and IBM container solutions — such as IBM Cloud Paks — as of 4Q19.

Public cloud remains the largest and fastest growing segment of the cloud market. Changes in customer acceptance, data integrations and innovation have combined to sustain the rapid growth of public cloud adoption. TBR’s Public Cloud Benchmark details how hybrid deployments, new use cases for enterprise apps, and trends in emerging technology will make public cloud even more relevant in the future.

IaaS and PaaS leaders maintain their current positions in the public cloud market but face mounting competition

Coopetition is growing among vendors to outcompete leaders in the public cloud market, and customers have responded positively by integrating multivendor environments. TBR expects this coopetition will enable multiline vendors to attain notable growth, but likely not until roughly 3Q20, after the COVID-19 pandemic abates, as enterprises manage remote workforces rather than undergo vast integrations.

Amazon Web Services (AWS), Microsoft, Google and Alibaba will continue to lead the global public cloud market, with Google and Alibaba driving the most significant total public cloud revenue growth among large vendors due to their smaller revenue bases. While these rivals battle globally, TBR expects competition will be greatest in Europe.

Public cloud remains the largest and fastest growing segment of the cloud market. Changes in customer acceptance, data integrations and innovation have combined to sustain the rapid growth of public cloud adoption. TBR’s Public Cloud Benchmark details how hybrid deployments, new use cases for enterprise apps, and trends in emerging technology will make public cloud even more relevant in the future.

COVID-19 survey update: Cloud reliance grows

This piece is an update to our blog post in late March that looked at how IT organizations are being impacted by COVID-19, including insights from TBR’s survey of enterprise IT leaders. The blog discussed how we are experiencing the second wave of impacts from the outbreak, in which widespread business disruption is affecting demand for IT products and services.

In typical IT research, we tend to track trending on a quarterly, semiannual or annual basis. Given that nothing we are experiencing during this pandemic aligns with the typical way of doing business, we have decided to compare how sentiment has shifted among IT leaders over a roughly two-week span. During the first half of April, we refielded our March pulse survey questions, which yielded the following trends in sentiment.

Overarching IT projects remain in wait-and-see mode

A delay in IT initiatives is one of the clear emerging trends as companies ride out disruptions to employees’ workflows and gauge the financial impact of the pandemic. Compared to the second half of March, there has been no change in the status of existing projects in the first half of April, with 42% of respondents indicating they are delayed. Trends have also remained constant in regard to IT budgets, with about 32% of respondents indicating budgets are frozen and new spending is on hold.

Attention is increasingly shifting toward enabling remote work

While long-term projects may be slowing or paused, there is growth in IT teams’ spending on and delivering of remote work capabilities for end users. In the latter half of March, 34% of respondents reported increasing spending on remote productivity; by mid-April, nearly half of respondents indicated this was the case. TBR believes this trend is driven not only by extensions of stay-at-home orders but also by general acknowledgement that a reintroduction to “normal” life will likely be a slow process.

Reliance on cloud is increasing

SaaS and IaaS are among some of the few IT segments that may see increased demand in the first half of this year. Responses from IT experts reflect this trend, with a considerable increase in respondents indicating usage of cloud resources has grown compared to our survey fielded in March. Currently 30% of respondents are increasing cloud usage due to data center shortages while 19% are increasing cloud consumption to offset labor shortages related to social distancing.

The impacts of the pandemic will be lasting

Respondents have not wavered from their belief that the use of cloud technology at their company will increase in the long term due to the COVID-19 pandemic, as indicated by 48% of those surveyed. Further, a decrease in respondents indicating their use of cloud technology will diminish in the long term suggests that companies expect this wave of cloud adoption will be maintained in the future, rather than serving as a temporary fix for employees needing to conduct business remotely.

On the other hand, there are also simultaneous increases in optimism and uncertainty compared to responses from two weeks ago, as more respondents indicated that they intend to return to typical IT strategies post-pandemic or that they do not know how the pandemic will shape their IT strategy.

While the pandemic has a variety of implications across different types of businesses as well as the IT vendors that serve them, our survey data suggests that IT strategies and ways of working will change for many. Contact TBR to learn more from our analyst team.

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).

Public cloud segment leaders projected to secure another 10% of market share by 2023

TBR estimates total public cloud market size was $165 billion in 2018. Microsoft (Nasdaq: MSFT) led the overall public cloud market, while Amazon Web Services (AWS) (Nasdaq: AMZN) maintained a strong lead on the IaaS segment and Salesforce (NYSE: CRM) delivered enough growth to sustain a top-three position in both SaaS and PaaS market share. Microsoft and AWS are expected to jointly compose nearly 40% of the public cloud market over the next five years, while Adobe (Nasdaq: ADBE) and IBM (NYSE: IBM) — fourth and fifth, respectively, in total public cloud revenue in 2018 — will fall out of the top five by 2023 due to adoption headwinds and an inability to convert established enterprise relationships into revenue growth while Alibaba (NYSE: BABA) and Google (Nasdaq: GOOG) take share.

Trend to watch

An increase in multicloud environments will position some vendors to take segment leaders’ market share.

“In the SaaS market, Microsoft Adobe and SAP have joined forces under the Open Data Initiative to challenge Salesforce’s single vendor suite,” TBR Senior Analyst Meaghan McGrath said. “Meanwhile, Alibaba and Google will embrace their role, providing additional PaaS and IaaS services to enterprises that made early investments in AWS or Microsoft.”

Public cloud remains the largest, fastest-growing segment of the cloud market. TBR’s Public Cloud Market Forecast analyzes the SaaS, PaaS and IaaS performances of leading vendors and details how hybrid deployments, new use cases for enterprise apps, and trends in emerging technology will make public cloud even more relevant in the future.