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Public cloud revenue not slowing, led by AWS, Microsoft Azure, etc.

Analysis of the first quarter shows that revenues have soared compared to the same period of the previous year. What does this mean for the future?

Public cloud revenue in the first quarter of the year soared 26% compared to the same period in 2021.

That’s according to new statistics from Synergy Research Group.

In major services and infrastructure markets, public cloud revenue reached $126 billion, analysts said Wednesday. The fastest growing sectors? : Infrastructure as a service and platform as a service. Combined, first-quarter revenue from these cloud solutions grew 36% to over $44 billion.

John Dinsdale of the Synergy Research Group

“Cloud-related public markets are typically growing at 15% to 40% annually, with PaaS and IaaS leading the charge,” said John Dinsdale, chief analyst at Synergy Research Group. “Over the next five years, growth rates will inevitably decline as these markets become increasingly massive, but we still expect annual growth rates that are generally between 10% and 30%.”

Indeed, the rate of increase in public cloud revenue has industry watchers wondering if cloud spending is slowing or stabilizing. As with any technology, unprecedented adoption — as has happened with the cloud during COVID-19 — can raise investors’ hopes that they’ve latched onto a moneymaker that will give them returns forever. higher.

But there are ceilings. Cloud providers can reach them as end users begin to take better control of their cloud spending. Organizations are not necessarily slowing down adoption but are better managing the resources they use in order to stop overpaying. (And with record inflation and a looming recession, who wants to shell out more than necessary?) As more organizations pay attention to their cloud spending, public cloud revenue will inevitably suffer; however, this does not mean that reliance on the cloud is diminishing.

More is to come

At this point, Synergy Research says major cloud providers will need to keep adding data centers and computing power to keep up with demand. Dinsdale expects this timeline to span the next three to four years. And since public cloud providers need more access and power, that will only bode well overall, he noted.

“[T]”Major cloud providers need an ever-larger scale data center footprint and more raw computing power, which in turn drives the data center hardware and software markets,” said said Dinsdale. “There will be tough competition for sure, but across the cloud ecosystem, there will be a bright future for companies that bring the right products to market in a timely manner.”

On that note, analysts said public cloud providers spent $28 billion, 20% more than last year, to build, lease and equip data center infrastructure.

And lest we forget other contributors to cloud environments, take a look at some additional areas that are seeing increased revenue. For example, Synergy reports that managed private cloud services, enterprise software as a service and content delivery networks added combined revenue of $54 billion in the first quarter. As a percentage, the figure was not far off that of public cloud revenue – up 21% from 2021.

In terms of regions, the United States remains the center of gravity, as Synergy puts it. The United States accounted for 44% of all cloud services revenue in the first quarter. It also accounted for 51% of the hyperscale data center capacity.

In the services and infrastructure markets, most players are American companies. The rest are mostly Chinese companies, according to Synergy. China was responsible for 8% of all cloud services revenue in the first quarter and 15% of hyperscale data center capacity, per Synergy.

Finally, the companies that are driving public cloud revenue growth will come as no surprise. Synergy cited top vendors like Microsoft Azure, Amazon Web Services, Salesforce, and Google Cloud. Other major players include Adobe, Alibaba, Cisco, Dell, Digital Realty, IBM, Inspur, Oracle, SAP and VMware. In total, these providers accounted for 60% of all public cloud revenue, or cloud-related revenue.