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Global cloud spending surges amid further COVID-19 lockdowns

Global cloud spending surges amid further COVID-19 lockdowns

Up 31 per cent year-on-year in Q2

Credit: Pero Kalimero

The worldwide cloud infrastructure services market is on a roll with spending growing by nearly a third over the second quarter of 2020 to support remote opportunities.

Spending on cloud infrastructure services increased by 31 per cent year-on-year in Q2, to US$34.6 billion.

This is up from of US$31 billion in Q1 and US$26.3 billion from Q2 2019.

The increase was found by research firm Canalys, which claimed it was the largest quarterly expansion identified in terms of US dollars and was due to new consumption records for online collaboration and remote working tools, e-commerce, remote learning and content streaming during lockdowns.

However, growth rates could have hypothetically been higher, as they are under the constraints of project slowdowns and IT budget stretching.

Business continuity was a top priority for organisations at the start of the year, and the need to keep those organisations going is still strong, according to Matthew Ball, chief analyst at Canalys.

“Cloud-based services were pivotal in enabling emergency continuity plans designed to maintain virtual operations during lockdown,” Ball said. 

“These will also prove to be critical in the next phase of the response to COVID-19, as economies gradually re-open. In addition to supporting continued remote working and distance learning, cloud-based services will underpin the deployment of new digital workflows such as online booking and ordering systems as well as other contactless service engagements. 

“It will also be part of solutions to make workplaces COVID-secure by monitoring occupancy levels and footfalls as well as contact-tracing to help reopen large offices and education facilities with confidence. Demand for cloud-based services will remain strong, as organisations accelerate their digital transformation initiatives over the next 12-months to capitalise on new emerging opportunities.”

Of the top providers, which accounted for 63 per cent of the total spend, Amazon Web Services (AWS) had the largest market share with 31 per cent of total spend.

This was followed by Microsoft Azure at 20 per cent, Google Cloud at 6 per cent and Alibaba Cloud at 5 per cent.

As time goes on, more organisations are set to look to these big four providers to move more workloads to the cloud, but is expected to be a prolonged process with multiple stages over many years.

As such, the top providers will need to clearly differentiate themselves, Canalys research analyst Blake Murray added.

“Differentiation among the leading providers will be critical as competition for customer’s spending on digital transformation projects intensifies,” he said.

“Security, code development and migration tools, support for multi-cloud and hybrid-IT deployments, as well as enabling more predictable costs will be key areas of focus as organizations look to move as quickly as possible, minimise disruption and keep within more constrained budgets. 

“The top four cloud service providers have maintained the pace of innovation over the last six months and will look to add further capabilities to help win new business. But competition from other cloud service providers will intensify.”

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