Cloud computing revenues grow 25% to hit $148 billion in 2016


Spending on cloud computing services overtook that of private cloud hardware and software for the first time in 2016, according to a report released Wednesday by Synergy Research Group.

The research also revealed that cloud operator and vendor revenues for the year ending Sept. 2016 hit $148 billion, representing revenue growth of just over 25 percent on an annualized basis.

“In aggregate cloud service markets are now growing three times more quickly than cloud infrastructure hardware and software,” Synergy said in the report.

The two fastest growing segments in cloud services were Infrastructure-as-a-Service and Platform-as-a-Service at 53 percent, the report said. Meanwhile, hosted private cloud infrastructure services saw annualized revenue growth of 35 percent, while Enterprise Software-as-a-Service achieved 34 percent growth for the year.

Amazon Web Services and Microsoft Corp. were the leaders in the IaaS and PaaS segments, with IBM Corp. and Rackspace Inc. dominating hosted private cloud infrastructure and Inc. taking the lead in enterprise SaaS.

Synergy said its figures show that cloud service providers’ big investments in infrastructure over the last year have paid off, as they generated almost $40 billion in revenues from enterprise SaaS services, and an additional $30 billion from cloud infrastructure services, including IaaS, PaaS and hosted private clouds.

“We tagged 2015 as the year when cloud became mainstream and I’d say that 2016 is the year that cloud started to dominate many IT market segments,” Synergy Research Group founder and Chief Analyst Jeremy Duke said in a statement. “Major barriers to cloud adoption are now almost a thing of the past, especially on the public cloud side. Cloud technologies are now generating massive revenues for technology vendors and cloud service providers and yet there are still many years of strong growth ahead.”

Elsewhere, Synergy reported that the Unified Communications-as-a-Service, also saw strong growth in the last year. “UCaaS, while in many ways a different type of market, is also growing steadily and driving some radical changes in business communications,” the report noted.