Canalys: Cloud marketplace sales to be > $45 billion by 2025
Canalys now expects that by 2025, cloud marketplaces will grow to more than $45 billion, representing an 84% CAGR. That was one of the market research firm’s predictions for 2023 and beyond (see chart below).
Cloud marketplaces [1.] are accelerating as a route to market for technology, led by hyperscale cloud vendors such as Alibaba, Amazon Web Services, Microsoft, Google and Salesforce, which are pouring billions of development dollars into the sector.
Note 1. A cloud marketplace is an online storefront operated by a cloud service provider. A cloud marketplace provides customers with access to software applications and services that are built on, integrate with or complement the cloud service provider’s offerings. A marketplace typically provides customers with native cloud applications and approved apps created by third-party developers. Applications from third-party developers not only help the cloud provider fill niche gaps in its portfolio and meet the needs of more customers, but they also provide the customer with peace of mind by knowing that all purchases from the vendor’s marketplace will integrate with each other smoothly.
“The marketplace route to market is on fire and cannot be ignored by any channel leader,” said Canalys Chief Analyst, Jay McBain. “Marketplaces grew more in the first three months of the pandemic than in the previous decade and have just kept growing,” he added.
“We under-called it,” explained Steven Kiernan, vice president at Canalys. “Cloud marketplaces are accelerating at such a dizzying speed that we’ve doubled our pre-pandemic forecast.
Some software vendors that are active on marketplaces, in particular cybersecurity vendors, are publicly reporting as much as 600% year-on-year growth via this channel, according to McBain.
In addition, the hyperscalers are now reporting growing numbers of billion-dollar customer commitments through enterprise cloud consumption credits, which cover more than just software.
The large cloud marketplaces have lowered fees from upwards of 20% down to 3%, enabling vendors to fund multi-partner offers inside the transaction.
Private equity is funding billions more into marketplace development firms such as AppDirect, Mirakl, Vendasta and CloudBlue to enable hundreds of niche marketplaces across different buyers, industries, geographies, customer segments, product areas and business models.
Canalys Chief Analyst, Alastair Edwards:
“The rise of this route to market represents a threat to both resellers and two-tier distribution. But as more complex technologies are consumed via marketplaces, end customers are also turning to trusted partners to help them discover, procure and manage marketplace purchases. The hyperscalers are increasingly recognizing the value of channel partners, allowing them to create customized vendor offers for end-customers, and supporting the flow of channel margins through their marketplaces. Hyperscalers’ cloud marketplaces are becoming a growing force in global IT distribution as a result.”
By 2025, Canalys conservatively forecasts that almost a third of marketplace procurement will be done via channel partners on behalf of their end customers.
Canalys key predictions for 2023 and beyond:
Canalys is an independent analyst company that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. We stake our reputation on the quality of our data, our innovative use of technology and our high level of customer service.
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