Public cloud revenue up 19.2% in first half of 2023

According to new data from the International Data Corporation (IDC) Worldwide Semiannual Public Cloud Services Tracker, worldwide revenue for the public cloud services market totaled $315.5 billion in the first half of 2023 (1H23), an increase of 19.1% over the same period in 2022.

Software as a Service – Applications (SaaS – Applications) continued to be the largest source of public cloud services revenue, accounting for nearly 45% of the total in 1H23. Infrastructure as a Service (IaaS) was the second largest revenue category with 20.4% of the total while Platform as a Service (PaaS) and Software as a Service – System Infrastructure Software (SaaS – SIS) delivered 18.0% and 16.9% of overall revenue respectively. PaaS and SaaS – SIS were the categories with the fastest year-over-year revenue growth.

“The fundamentals of cloud technologies and public cloud PaaS providers as strategic partners to enterprises and companies of all sizes are evident as AI pervasiveness strengthens,” said Lara Greden, research director, Platform as a Service, IDC. “Companies continue to accelerate movement to and adoption of the cloud for modernization and new, intelligent application initiatives based on all types of data streams. The strong market growth seen in PaaS comes from not just the top few but a large ecosystem of PaaS vendors that are meeting customer needs in the cloud.”

The leading providers of public cloud services maintained their positions in 1H23 with the combined revenue of the top 5 public cloud service providers – Microsoft, Amazon Web Services, Salesforce Inc., Google, and Oracle – capturing 41% of the worldwide total and relatively unchanged year over year. With offerings in all four deployment categories, Microsoft remained in the top position in the overall public cloud services market with 17.1% share in 1H23, followed by Amazon Web Services with 12.6% share.

IDC forecasts worldwide public cloud services revenue will reach $663 billion in 2023, an increase of 20.0% over 2022 with a similar increase expected in 2024. While the annual rate of growth will slow slightly over the forecast period, the market is still forecast to deliver a five-year compound annual growth rate (CAGR) of 19.4% with worldwide revenues reaching $1.34 trillion in 2027.

“Organizations recognize the importance of staying at the forefront of technological advancements, like generative AI or real-time analytics, to enhance their business operations and gain a competitive edge,” said Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services. “The cloud’s dynamic nature and the continuous evolution of cloud services make it an ideal platform for organizations to adopt new technologies. This creates a great opportunity for the cloud service providers to offer comprehensive support and management services, reducing the burden on IT teams and accelerating the deployment and integration of new technologies.” IDC