Worldwide end-user spending on public cloud services is forecast to grow 20.4% to total $678.8 billion in 2024, up from $563.6 billion in 2023, according to the latest forecast from Gartner, Inc.

“Cloud has become essentially indispensable,” said Sid Nag, Vice President Analyst at Gartner. “However, that doesn’t mean cloud innovation can stop or even slow. The tables are turning for cloud providers as cloud models no longer drive business outcomes, but rather, business outcomes shape cloud models.”

“For example, organizations deploying generative AI (GenAI) services will look to the public cloud, given the scale of the infrastructure required. However, to deploy GenAI effectively, these organizations will require cloud providers to address nontechnical issues related to cost, economics, sovereignty, privacy and sustainability.

Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows.” All segments of the cloud market are expected see growth in 2024. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2024 at 26.6%, followed by platform-as-a-service (PaaS) at 21.5% (see Table 1).

Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (November 2023)

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Another key trend driving cloud spending is the continued rise of industry cloud platforms. Industry cloud platforms address industry-relevant business outcomes by combining underlying software-as-a-service (SaaS), PaaS and IaaS services into a whole-product offering with composable capabilities. Gartner predicts that by 2027, more than 70% of enterprises will use industry cloud platforms to accelerate their business initiatives, up from less than 15% in 2023.

“GenAI adoption will also support the growth in industry cloud platforms,” said Nag. “GenAI models that are applicable across diverse industry verticals might require significant customization, affecting scalability and cost-effectiveness. Public cloud providers can position themselves as partners in the responsible and tailored adoption of GenAI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds.”

Gartner previously forecast that Public Cloud services spending to hit $1.35 trillion in 2027.  The U.S. will be the largest geographic public cloud market and will reach $697 billion in 2027. Western Europe is predicted to be in second place with $273 billion, followed by China at $117 billion in 2027.  IDC forecasts that software-as-a-service (SaaS) applications to be the largest cloud computing category, garnering about 40% of all public cloud spending. Next largest is infrastructure as a service (IaaS) with a CAGR of 23.5%, followed by platform as a service (PaaS) with a five-year CAGR of 27.2%.

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References:

https://www.gartner.com/en/newsroom/press-releases/11-13-2023-gartner-forecasts-worldwide-public-cloud-end-user-spending-to-reach-679-billion-in-20240

https://www.idc.com/getdoc.jsp?containerId=prUS51179523

IDC: Public Cloud services spending to hit $1.35 trillion in 2027

Gartner: Public Cloud End-User Spending to approach $500B in 2022; $600B in 2023

Gartner: Global public cloud spending to reach $332.3 billion in 2021; 23.1% YoY increase

Gartner clients can learn more in “Forecast: Public Cloud Services, Worldwide, 2021-2027, 3Q23 Update.”

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