The shift to outsourced third party infrastructure has been going on for nearly two decades. Since the early days, the landscape has been highly fragmented with no dominant providers. That changed with the entry of Amazon Web Services in 2006 and ten years later, the game-changing shift it threatened to ignite is on.
The competitive landscape in cloud is quickly starting to separate. Hoster-operated clouds are growing but remain relatively small. In contrast, cloud infrastructure growth at the top of the market is aggressive and gathering steam. In 2016, the massive-scale cloud (MSC) infrastructure market will approach $20b in annual revenue and our projected CAGR for 2015-2020 is 61.3%.
Why is it important to focus in on the massive-scale clouds as a distinct group? Quite literally: because of scale. Scale brings inherent advantages that have a momentum all its own. As the big providers continue to drive more efficiency and use their resources to develop and acquire more technological innovation, they will continue to put downward pressure on pricing and make raw compute infrastructure that much more difficult to compete in – at least at the core foundation. And this will have long-term effects that will transform the market. We are already seeing it. The industry is starting to shift towards building value on top of scale rather than trying to compete against it. It is pivoting to specialized areas and verticals and going after different user demographics.
The intensity of this scale is on full display in the numbers presented in this report. We provide growth rate projections and total revenue estimates for the massive-scale cloud providers – a list that consists of only seven companies – and supplement this with geographic splits and a total market share summation.