Cloud Services Market to Hit $66 Billion by 2016

By Nathan Eddy  |  Print this article Print

The market in North America will grow at a CAGR of 27.1 percent between 2011 and 2016 to hit $33 billion.

The global public cloud services market will more than triple in size over the next five years to reach revenue of $66 billion in 2016 and the market will see a compound annual growth rate (CAGR) of 29.4 percent from the $18 billion it will reach at the end of 2011, according to a forecast from independent technology analyst firm Ovum.

Ovum reported that North America will continue to dominate the global market with a 50 percent share in 2016, albeit down slightly from the 54.6 percent it holds in 2011. The market in North America will grow at a CAGR of 27.1 percent between 2011 and 2016, increasing from $10 billion to hit $33 billion.

In terms of the cloud computing service lines, software as a service (SaaS) will shrink from 87 percent of the market in 2011 to 62 percent in 2016 due to the rise of infrastructure as a service (IaaS) and platform as a service (PaaS), which will grow from 9 percent and 5 percent, respectively, to 23 percent and 16 percent by the end of the forecast period, according to the report.

"The global public cloud services market will explode over the next five years as uptake soars worldwide," Ovum cloud computing analyst Laurent Lachal commented. "However, although the market size will see strong growth, the evolution of cloud computing within enterprises and the IT trends that follow will happen more slowly."

In the worldwide cloud services market, Asia-Pacific will increase its share from 16 percent in 2011 to 18.8 percent in 2016, and the region will grow at a CAGR of 33.9 percent from 2011 to 2016, from $2.9 billion to $12.4 billion, the report projected. Meanwhile, Europe, the Middle East and Africa will remain the second-largest market over the forecast period. The region’s share will increase from 27 percent in 2011 to 29 percent in 2016. Western Europe will grow at a CAGR of 31.2 percent from 2011 to 2016 to reach $17.2 billion, up from $4.4 billion in 2011.

According to Lachal, although the market is growing at a fast pace and players such as Amazon and Google are making much progress, the impact of public clouds will not be to render IT departments obsolete, but rather to shift their focus. "Shifts will include taking a more holistic approach to connecting networks, hardware and software. IT departments will also reduce their emphasis on maintenance and increase their innovation, while being encouraged to take more risks, by giving employees the capacity to tackle high-reward ventures," he said. "But, as ever, preparation is the key to ensuring that cloud computing delivers a positive outcome."