Organizations spent more than $63 billion on cloud infrastructure services in the first quarter, according to a new report from Synergy Research Group.

The report, which was released on Thursday, covers the infrastructure-as-a-service, platform-as-a-service and hosted private cloud segments. The PaaS category includes products such as managed database platforms. Hosted private cloud, in turn, is the term for services that are delivered as dedicated instances to each customer rather than on hardware shared by multiple users.

Worldwide spending across the three product categories totaled $63.7 billion in the first quarter, according to Synergy Research. That’s $11 billion more than what organizations spent the same time a year earlier. But although cloud investments increased significantly, demand is growing at a slower pace than in previous years.

According to Synergy Research, the $11 billion spending increase it measured during the first quarter amounts to a 20% year-over-year increase. In the first quarter of 2022, the market experienced 34% revenue growth. Spending rose at similar levels during the preceding three years.

“There is no doubt that the current economic climate has constrained some growth in cloud spending, but the market continues to expand at a healthy rate despite those short-term challenges,” Synergy Research stated. 

Amazon Web Services Inc., Microsoft Corp. and Google LLC captured 65% of cloud infrastructure services spending in the first quarter. AWS had an estimated market share of 32% to 34%. Microsoft and Google accounted for 23% and 10% of the market, respectively, which represents a one-percentage-point increase for both companies compared with the year-ago quarter. 

The past quarter marked a particularly major milestone for Google. The company’s cloud business produced its first-ever profit, partly thanks to recent changes in the Alphabet Inc. unit’s accounting practices. During the three months ended March 31, Google Cloud generated $191 million in operating income on revenue of $7.45 billion.

According to Synergy Research, the next 20 largest players in the cloud infrastructure services market accounted for 26% of spending. Within that group, the companies believed to have achieved the fastest year-over-year growth are Oracle Corp., Snowflake Inc., MongoDB Inc., Huawei Technologies Co. Ltd. and the three largest telecommunications providers in China. The remaining 9% of worldwide spending went to other market players.

“Geographically, the cloud market continues to grow strongly in all regions of the world,” Synergy Research detailed. “When measured in local currencies, North America, APAC and EMEA regions all grew by well over 20% year over year.”

The cloud market is expected to continue its growth in the coming quarter. Gartner Inc. projects that worldwide spending on public cloud services will increase from $491 billion last year to $597.3 billion in 2023.

Photo: Unsplash