The U.S. Leads in Public Cloud Services, But Other Regions Are Catching Up

Public cloud services are one of the biggest disruptions in the tech market in the past 15 years. In September 2016, my colleagues Andrew Bartels, Dave Bartoletti, and John R. Rymer published their latest public cloud services outlook, The Public Cloud Services Market Will Grow Rapidly To $236 Billion In 2020,projecting 22% annual growth in public cloud services over the 2015-to-2020 period.

Explosive growth in cloud applications has depressed software license sales, and cloud platforms have upended the traditional on-premises server and storage market. The pure-play public cloud players continue to report fantastic growth: Amazon Web Services’ revenue grew 58% year-over-year in Q2 2016, and Microsoft Azure reported 116% year-over-year revenue growth in Q1 2017 (September). In response, traditional software and hardware vendors are moving to the cloud via both acquisitions and launches of new cloud services.

The ForecastView team has taken a look at public cloud growth by region in our Forrester Data: Public Cloud Services Forecast, 2016 To 2020 (Global).We expect the US to remain the largest market for public cloud services over the next five years, and we estimate that the US public cloud services market will grow 18.9% over the 2015-to-2020 period, to $129 billion in 2020 versus $54 billion in 2015. The US represented 62% of the global public cloud services market in 2015, but its share will shrink slightly to 54% by 2020 as other regions accelerate public cloud adoption.

Asia will be the fastest-growing region over the next five years, with a 34.8% CAGR. Our survey data shows that there is a strong interest in India and China in public cloud services. While the China public cloud market is still relatively small, we see significant opportunity for expansion moving forward. For example, both Aliyun and Huawei are offering public cloud services in China. Earlier this year, AWS expanded its footprint into Mumbai. This will be AWS’s sixth region in Asia; other regions include Tokyo, Singapore, Seoul, and Sydney.

What’s driving this growth globally? In our Global Business Technographics® Infrastructure Survey, 2016, IT professionals cited improved disaster recovery and business continuity, improved IT infrastructure manageability and flexibility, on-demand capacity and scalability, and lower total cost of ownership of servers.

Jennifer Adams is a senior forecast analyst at Forrester Research, where she focuses on the business technology (BT) and eCommerce sectors. Read more Forrester Research blogs here.