Synergy Research: public cloud service and infrastructure market hit $126B in 1Q-2022

According to a new report from Synergy Research Group, public cloud service and infrastructure service provider and vendor revenues for the 1st quarter of 2022 reached $126 billion, having grown by 26% (YoY) from the 1st quarter of 2021.

As expected, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud led public cloud service providers (CSPs) in revenue growth.  Those three CSPs powered a robust 36% growth rate in the infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) public cloud segments, which hit $44 billion in revenues during the quarter.

In the other main service segments, managed private cloud services, enterprise SaaS and CDN (Content Delivery Networks) added another $54 billion in service revenues, having grown by an average 21% from last year. In order to support both these and other digital services, public cloud providers spent $28 billion on building, leasing and equipping their data center infrastructure, which was up 20% from Q1 of last year. Across the whole public cloud ecosystem, companies that featured the most prominently were Microsoft, Amazon, Salesforce and Google. Other major players included Adobe, Alibaba, Cisco, Dell, Digital Realty, IBM, Inspur, Oracle, SAP and VMware. In aggregate these companies accounted for 60% of all public cloud-related revenues.

Amazon, IBM, and Microsoft led in managed private cloud revenue during the quarter; Microsoft, Salesforce, and Adobe powered similar growth in enterprise software-as-a-service (SaaS) revenues; and Akamai, Amazon, and Cloudflare headed up a 14% increase in content delivery network (CDN) revenues for the quarter. Those three segments in total generated $54 billion in revenues during the first three months of the year.

While cloud markets are growing strongly in all regions of the world, the United States remains a center of gravity. In Q1 it accounted for 44% of all cloud service revenues and 51% of hyperscale data center capacity. Across all service and infrastructure markets, the vast majority of leading players are US companies, with most of the rest being Chinese (e.g. Alibaba, Tencent and Huawei). China accounted for 8% of all Q1 cloud service revenues and 15% of hyperscale data center capacity.

Editor’s Note:

In China, Alibaba Cloud remains the leader with a 37% market share, ranking first in the cloud market in 2021, Huawei Cloud and Tencent Cloud second and third respectively, and Baidu AI cloud fourth. In 2021, the four cloud providers jointly accounted for 80% of the market share.


“Public cloud-related markets are typically growing at rates ranging from 15% to 40% per year, with PaaS and IaaS leading the charge. Looking out over the next five years the growth rates will inevitably tail off as these markets become ever-more massive, but we are still forecasting annual growth rates that are generally in the 10% to 30% range,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “To enable cloud service markets to keep up with demand by doubling in size in the next 3-4 years, the major cloud providers need an ever larger footprint of hyperscale data centers and more raw computing power, which then drives the markets for data center hardware and software. For sure the competition will be tough, but up and down the cloud ecosystem there will be a bright future for companies that bring the right products to market in a timely fashion.”

About Synergy Research Group:

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database SIA ™, which enables easy access to complex data sets. Synergy’s Competitive Matrix ™ and CustomView ™ take this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence.


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One thought on “Synergy Research: public cloud service and infrastructure market hit $126B in 1Q-2022

  1. Public cloud providers offer telecom operators a radical business transformation opportunity but many remain wary of relinquishing their assets and forsaking control. Today, public cloud providers have accelerated time-to-market for many enterprises. With 5G core networks considered inherently cloud-native, many 5G standalone networks are being deployed with a cloud-based architecture. Meanwhile, concerns remain over the suitability of public cloud for operator network infrastructure and workloads.

    This article sets out to explore what communication service providers (CSPs) and other industry experts consider some of the biggest challenges and drivers for the adoption of public cloud.

    CSP Drivers:

    With telcos’ growing need to expand revenues beyond connectivity, research from analyst firm STL Partners suggests there is an opportunity for operators to capitalise on the cloud and to partner with public cloud providers. As such, the analysts suggest the migration of IT environments and telco workloads to the public cloud are inevitable for operators.

    Further, a recent study by Capgemini, an IT services and consulting firm, shows that on average CSPs are expected to invest around one billion US dollars into their network cloud transformation over the next 3-5 years. Per operator, this sum reportedly equals to 38-44% of their total network transformation budgets.

    With such level of investment needed to develop a cloud platform, applications, and services, combined with the opportunity to capitalize from public cloud, some in the industry see hyperscalers and other large public cloud vendors as ideal partners for CSPs. The existing investments into building and operating large cloud infrastructures and offerings can significantly reduce their total cost of ownership (TCO) for CSPs, making TCO the primary driver for telcos to embrace public cloud.

    Operational efficiencies gained from running IT systems on the public cloud are another area often discussed in relation with drivers for moving workloads. In terms of scale, public cloud is believed to enable CSPs to expand their addressable market, improve their B2B offerings, and support B2B2x solutions.

    Public cloud also promises to offer a pay-as-you-go model based on microservices and Kubernetes (also known as k8s) applications. Such microservices enable telcos with rapid deployment of their go-to-market strategies and facilitate real-time data streaming. Though it is worth noting here that k8s can also be deployed in an on-premise environment and as such are not unique to public cloud.

    Public cloud also offers deployment benefits such as flexible and agile customer and revenue management and scalable offerings to increase monetisation of services. Therefore, hosting business support systems (BSS) and the operating support systems (OSS) in the public cloud are seen as particularly valuable use cases. However, there are also security considerations when hosting transactional data and systems (i.e. BSS workloads) on the public cloud. This is due to its multitenancy nature (more to this further below).

    In terms of leveraging additional public cloud capabilities, research from Omdia suggests that there are additional advantages for CSPs. These include capabilities offered by AI and ML to help automate processes and monetise insights gained through data. Here Google’s Cloud Platform is cited as the frontrunner. Automation is valuable to CSP tasks such as testing and repetitive tasks, though the research is also quick to flag that maintaining control is equally important for operators.

    Some may argue public cloud is an attractive proposition especially for new market entrants. In the US, greenfield operator Dish presents such an example. In early 2021 it announced a collaboration with Amazon Web Services (AWS) for constructing its full 5G network. The operator connected all its 5G hardware and network management systems through the cloud provider.

    There are also public cloud partnership examples between hyperscalers and brownfield operators. These include AT&T and Microsoft Azure in the US, Bell Canada and Google, and more recently Tele2 and AWS in Norway. But despite some uptake in such partnerships, many operators remain somewhat sceptical and unclear about the best approaches towards public cloud. Here are some of the key concerns we have gathered.

    CSP concerns over public cloud:

    The telecom industry is highly regulated and often considered as part of critical infrastructure. As such, it is vital that CSPs maintain control, know where their networks and customer data reside, and can ensure those locations are safe.

    In a recent survey by more than four in five industry respondents feared security concerns over running telco applications in the public cloud, including 37% who find it hard to make the business case for public cloud as private cloud remains vital in addressing security issues. This also means that any efficiency gains are offset by the IT environment and the network running over two cloud types.

    Meanwhile, many in the industry also fear vendor lock-in and lack of orchestration from public cloud providers. Around a third of industry experts from the same survey find it a compelling reason not to embrace and move workloads to the public cloud unless applications can run on all versions of public cloud and are portable among cloud vendors.

    This brings us to the issue of interoperability and interconnectedness. Proponents of public cloud may argue that through a multi-cloud approach operators can use offerings from various vendors and thus introduce a diverse set of public cloud providers in their networks. However, as it stands, the services of different public cloud vendors are indeed not interconnected nor interoperable for the same types of workloads. This concern is one of the drivers to avoid public cloud, according to some operators.

    Alongside vendor lock-in and interoperability are also considerations over TCO savings versus long-term costs. In that, CSPs are unclear over the long-term financial benefits and worry over potential risks of increased costs once their network is locked-in with a public cloud provider.

    When it comes to network or service availability, there is still a lack of reliability on hyperscalers for five nines (a telecom network uptime goal of 99.999% of the time), according to some voices in the industry. As critical infrastructure, service availability (which contractually is typically defined under a service level agreement) is a hugely significant characteristic for network operators. Network availability can also have a significant impact on operators both commercially as well as from a customer experience perspective.

    As an increasing number of mission critical application and services are added on telecom networks, the ability to support five nine KPIs and delivering on service level agreements becomes even more critical. Collaborations among vendors and public cloud providers can help optimise platforms and support network availability.

    These concerns are also evident by the recent operator-driven initiative Sylva. It’s been argued that the project highlights the operator community’s keenness on taking telco cloud into own hands. The initiative also highlights, alongside security, data sovereignty as another key area of concern for CSPs. This further emphasizes the need for alternative solutions to public cloud that are built with open, interoperable, and interconnected solutions in mind has moved up CSPs’ priority list.

    Considering these challenges, it is not surprising to see that public cloud still makes up a small portion of total telecoms networks and workloads. The below graph from a research paper by Capgemini illustrates which type of cloud architecture is currently being used or is planned in the telecoms core network, the Radio Access Network (RAN), OSS and orchestration, and for the use of multi-access edge computing.

    Source: Capgemini

    Hybrid cloud could ease the transition

    With 5G core leading the migration of network workloads to the cloud, it is more important than ever to find the optimum road to cloud adoption. Many in the industry are considering a balanced approach in their journey towards becoming cloud-native. In that, hybrid cloud enables CSPs to identify the best use cases for each cloud strategy and thus to transition telco applications and workloads more gradually and systematically. It also allows CSPs to consume public cloud applications and benefits in a private manner.

    For instance, in a bid to modernise its BSS to match the capabilities of its e-commerce and application offerings, European CSP Vodafone entered into a partnership deal with cloud solutions provider Oracle last year. Here, due to the risks associated with transactional data hosted on the public cloud, the operator opted for a hybrid model. As such, Oracle has built the operator a complete set of public cloud offering on the CSP’s own data centres, i.e. keeping the workloads on-premise.

    The operator also has several hybrid cloud partnership agreements with the other US-based hyperscalers for its operating support systems, data processing and analytics, and edge computing services. Other European Opcos taking such hybrid approaches include Deutsche Telekom (DT) and Telefonica.


    The use of hybrid cloud and the Vodafone example paint a picture of a cloud journey that cherry picks the best of both worlds. However, there are still few considerations to keep in mind. Hybrid cloud introduces some difficulties and complexities around operating multiple interfaces. This approach may eventually require internal resources to acquire new skills to operate several new cloud technologies. Additionally, hybrid cloud built by hyperscalers will intrinsically consist of some level of proprietary technology. Some in the industry view this as a de facto lock-in.

    Since security and service availability are also key concerns preventing many CSPs from the move to public cloud – especially when it comes to core networks – adopting industry-standard approaches and security strategies become key considerations. These can include incorporating the most modern security approaches (e.g. DevSecOps) early in the adoption process.

    While it may be more difficult for some operators (potentially smaller CSPs) to disregard the initial cost savings offered by public cloud, many incumbent operators are still reluctant to relinquish their network workloads fully. Among those most vocal about it is US-based MNO Verizon, which suggested it would never put its core networks in public cloud, and European multi-nationals such as DT which also has no plans to move its network functions into the public cloud domain.

    This is despite both CSPs having adopted various telco cloud approaches, including hybrid cloud solutions, in telco IT, edge computing and data processing. For wider context it is also worth noting that DT is among the European operator groups spearheading project Sylva, alongside its peers Orange, Telefonica, TIM and Vodafone together with Nordic kit vendors Nokia and Ericsson.

    To sum up, despite the TCO savings and operational efficiencies, the majority of CSPs have not initiated a public cloud deployment strategy. By all accounts, when it comes to telco procurement, experienced CSPs may well aim to avoid risking all their resources in one single venture, relinquishing control, and getting cut off from their own assets. Meanwhile, most CSPs introducing public cloud to their networks, it appears, are taking a considered and steady transformational approach. But regardless of public, hybrid, or private, the future of telco networks is eventually headed to the clouds.

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