Report: Worldwide cloud spending up 33% in Q3

As workers continue to rely on the remote office as a result of the global pandemic, investments in the cloud have gone up a third, according to data from Canalys.

Cloud.

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As the COVID-19 pandemic has shifted the workplace from the office to the home, tools that support the way teams work together, such as video conferencing and cloud sharing, have become staples for collaboration. A report from the IDC showed cloud spending increasing modestly in the beginning of COVID-19—but now, as the remote office has become the "new normal," a report from Canalys on Q3 spending shows an even greater jump in worldwide cloud spending, up 33%.

The data from Canalys illustrates how the need for cloud-based consumer and business services has pushed businesses to invest in the server, storage, and networking infrastructure that cloud service provider data centers are able to provide. These tools have been necessary for all kinds of players, from governments to organizations to businesses to consumers. As countries continue to grapple with lockdown measures to protect public safety, many of these entities will continue to use the cloud to keep businesses afloat, the firm said.

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The report highlights Amazon Web Services (AWS) as the top global cloud provider in Q3 2020, boosting spending more than US$2.6 billion in Q3 versus the same period last year, and pulling in more spending than than the next three largest cloud service providers, together. 

Microsoft Azure represents 19% of the market, up from a 17% share in Q3 2019, and has seen increased commitments from businesses that want to use the platform long term. Google Cloud remained steady, holding on to its place as the third-largest cloud service provider, the report states. And in China, Alibaba Cloud reigns supreme, especially as the government relies on it for development.

While the enterprise was dealing with some uncertainty in the beginning of the pandemic, now that the "new normal" is becoming accepted, they have now begun to invest in long-term projects, according to Matthew Ball, chief analyst at Canalys.

"Some organizations are taking a cost-driven approach by reducing capital expenditure on their own data centers and cutting management costs from outsourcing contracts," Ball wrote in the press release. "Others are taking a transformational approach, developing new cloud-native applications and business models. But they will all have to be more measured and cost-conscious, requiring greater control and visibility of spend, while also deciding not to migrate every workload."

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The report shows multicloud and hybrid IT continuing growth, especially as organizations rely on "mobile edge incorporating 5G for existing and new applications requiring ultra-low latency," which power autonomous vehicles, industrial robotics, and augmented and virtual reality solutions, the report says.

"The convergence of cloud and 5G at the mobile edge will form the next wave of growth for the leading cloud service providers," said Canalys research analyst Blake Murray, in the press release. Murray also sees these forces as spurring competition between AWS with Wavelength, Microsoft Azure with Edge Zones, and Google Cloud with Mobile Edge Cloud. 

"All three are collaborating with mobile operators to deploy their cloud stacks at the edge in the operators' data centers," Murray said. "These are part of holistic initiatives to profit from 5G services among business customers, as well as transform the mobile operators' IT infrastructure."

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