Quarterly Cloud Market Once Again Grows by $10 Billion from 2022; Meanwhile, Little Change at the Top

RENO, NV, August 3, 2023

New data from Synergy Research Group shows that Q2 enterprise spending on cloud infrastructure services was close to $65 billion worldwide, up by $10 billion from the second quarter of last year. That is the third successive quarter in which the cloud market grew by $10 billion from 2022. The year-on-year growth rate was 18% in Q2, down from 19% in the previous quarter and 20% in the fourth quarter of 2022. Q2 spending was up by 3% from Q1, similar to the quarter-on-quarter growth rate seen in Q2 of last year. The current economic climate has crimped some growth in cloud spending, but the market continues to expand at a healthy rate despite those short-term challenges. Among the largest cloud providers Google and Microsoft had the stronger year-on-year growth numbers, resulting in both increasing their worldwide market share by a percentage point from the second quarter of last year. Their Q2 worldwide market shares were 22% and 11% respectively. Meanwhile market leader Amazon stayed within its long-standing market share band of 32-34%, though towards the bottom end of that range. In aggregate the three leaders accounted for 65% of the worldwide market. Among the tier two cloud providers, those with the highest year-on-year growth rates include Oracle, Snowflake, MongoDB, VMware, Huawei and China Telecom. With most of the major cloud providers having now released their earnings data for Q2, Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $64.8 billion, with trailing twelve-month revenues reaching $247 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 19% in Q2. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three control 72% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world. When measured in local currencies the APAC region had the strongest growth, with India, China, Australia and South Korea all growing by well over 20% year over year.

The growth rate in cloud spending continues to nudge down, driven by macroeconomic pressures, some belt-tightening by enterprises, local market issues in China, and, above all else, the law of large numbers. While growth rates are coming down, in absolute terms the quarterly market keeps on growing by $10 billion from last year. With the Chinese market potentially returning to somewhat more normal circumstances, many economic pressures easing, and enterprises having rationalized historic cloud usage and spending, Synergy expects future cloud growth rates to remain buoyant.