Cloud Services Market Reaches US$42 Billion in 1Q21

Cloud infrastructure services spending grew 35% to US$41.8 billion in the first quarter of 2021, according to Canalys. The trend of using cloud services for data analytics and machine learning, data center consolidation, application migration, cloud native development and service delivery continued at pace.

Overall, customer spending exceeded US$40 billion a quarter for the first time in Q1, with total expenditure nearly US$11 billion higher than in 1Q20 and nearly US$2 billion more than in 4Q20, according to Canalys data. The acceleration of digital transformation over the last 12 months, with organizations adapting to new working practices, customer engagement, and business process and supply chain dynamics, has elevated demand for these services. This, combined with the rebound in some economies, in line with government stimuli, the roll-out of mass COVID-19 vaccination programs and subsequent easing of restrictions, has increased customer confidence in committing to multi-year contracts.

Amazon Web Services was the leading cloud service provider, growing 32% on an annual basis to account for 32% of total spend. Microsoft Azure grew 50% for the third consecutive quarter, taking 19% market share. Google Cloud maintained its momentum, growing 56% in the latest quarter to account for a 7% market share.

“Cloud emerged as a winner across all sectors over the last year, basically since the start of the COVID-19 pandemic and the implementation of lockdowns. Organizations depended on digital services and being online to maintain operations and adapt to the unfolding situation,“ said Canalys Research Analyst Blake Murray. “Migration and cloud spend will continue as customer confidence rises during 2021. Large projects that were postponed last year will resurface, while new use cases will expand the addressable market.“