The Cloud

Public Cloud Market to Grow 16.5% in 2016

The strong growth is being driven by the shift away from legacy IT as organizations pursue a digital business strategy.
Matthew HellerJanuary 27, 2016

The global market for public cloud systems will grow 16.5% to $204 billion this year, with the highest growth coming from infrastructure as a service (IaaS), according to Gartner Inc.

The research firm is projecting strong growth into 2017 across all public cloud segments. In 2016, IaaS is expected to grow 31.9% to $22.4 billion and cloud advertising, the largest segment of the market, is expected to grow 13.6% to $90.3 billion.

“This strong growth continues reflect a shift away from legacy IT services to cloud-based services, due to the increased trend of organizations pursuing a digital business strategy,” Sid Nag, research director at Gartner, said in a news release.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Zeus Kerravala, an analyst with ZK Research, noted that, with IT budgets growing at a rate of 1% to 3%, cloud services is one of the fastest-growing segments of IT.

“Traditional packaged software is having about 3% growth, so cloud is five times that,” he told Computerworld. “The cloud just greatly simplifies IT but also enables businesses to move faster.”

According to Nag, IaaS is leading the way as “enterprises move away from data center build-outs and move their infrastructure needs to the public cloud. Certain market leaders have built a significant lead in this segment, so providers should focus on creating differentiation for success.”

As far as other services, cloud application services (SaaS) are also expected to show 20.3% year-over-year growth, reaching $37.7 billion. Cloud management and security services, with 24.7% growth, and cloud application infrastructure services, known as PaaS, also are strong this year with expected growth of 21.1%.

“I think we’re still in the beginning of the cloud era,” Kerravala said. “I think we’re likely to continue to see companies shift their strategies away from on-premise to the cloud. Lots of companies fear the cloud because of security issues, but I think those fears dissipate and as more companies grow confidence, that will continue to fuel the cloud market.”