Cloud infrastructure services spending hits record high in fourth quarter

Driven by digital transformation initiatives across all industries, spending on cloud infrastructure services jumped by 37% to more than $30 billion in 2019's final quarter, says analytics firm Canalys.

Cloud providers are the happy recipients of a dramatic increase in spending on their services, according to a report released Tuesday by Canalys

Worldwide spending on cloud infrastructure services reached a record high last quarter of more than $30 billion, a boost of 37% from the same quarter in 2018.

SEE: Vendor comparison: Microsoft Azure, Amazon AWS, and Google Cloud (TechRepublic Premium) 

For all of 2019, spending on these services surpassed $107 billion, up from $78 billion in 2018. The boost in spending is being driven by digital transformation projects across all industries, Canalys said. 

Organizations are investing more in computer, storage, and other on-demand cloud-based services to analyze their growing sets of data and meet internal DevOps needs as they create more applications and services.

"Organizations across all industries, from financial services to healthcare, are transitioning to being technology providers," Canalys Chief Analyst Alastair Edwards said in a press release. 

"Many are using a combination of multiclouds and hybrid IT models, recognizing the strengths of each cloud service provider and the different compute operating environments needed for specific types of workloads," Edwards said.

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Canalys

Among the major cloud providers, Amazon Web Services (AWS) remained on top last quarter, accounting for $9.8 billion in spending and a 32% market share. Spending on second place Microsoft Azure reached $5.3 billion, giving it an 18% slice of the market. Google Cloud came in third with a 6% share, followed by Alibaba Cloud with 5%.

AWS is poised for further growth as Amazon invests in new enterprise sales and marketing resources, expands its AWS Outposts, and launches AWS Local Zones

Microsoft Azure gained more ground in enterprise accounts and expanded its channel reach. Microsoft also worked with channel partners to push customers to adopt Azure as support for Windows Server 2008 came to an end.

Google Cloud succeeded in generating new enterprise customers and developing its network of channel partners. Alibaba Cloud remained the leader in China as growth took off. Alibaba is looking to expand its customer base across the rest of Asia Pacific and Europe.

"Cloud service providers are having to carefully manage capital expenditure to balance rising costs with the need to add more capacity, expand geographically, and refresh existing assets," Canalys Principal Analyst Matthew Ball said in a press release. 

The "super seven cloud builders"–Alibaba, Amazon, Baidu, Facebook, Google, Microsoft and Tencent–collectively spent more than $60 billion in 2019 on data center infrastructure, Ball added.

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