Australian organisations are set to spend $341.7 million on infrastructure-as-a-Service this year - up 14.7 per cent - despite "brutal competitive dynamics" causing upheaval in the market.
That's according to Gartner vice president and distinguished analyst, Lydia Leong, who said "brutal competitive dynamics" were forcing many IaaS providers to re-think their business strategy and change, eliminate or replace their current offerings, after failing to secure enough market share.
"The market for cloud infrastructure as a service (IaaS) is in a state of upheaval, as many service providers are shifting their strategies after failing to gain enough market traction," she said. Global spending on IaaS is expected to reach almost $US16.5 billion in 2015, an increase of 32.8 percent from 2014, with a compound annual growth rate (CAGR) from 2014 to 2019 forecast at 29.1 percent, according to Gartner's latest forecast. Speaking at the Gartner Infrastructure, Operations and Data Centre Summit in Sydney, Leong said the IaaS solution ecosystem was rapidly consolidating around a small number of market leaders. "The sky is not falling - customers are getting great value out of cloud IaaS - but the competitive landscape is shifting," she said.
"Few providers have the financial resources to invest in being broadly competitive in the cloud IaaS market." According to Gartner, 2014 was a year of reckoning for many cloud IaaS providers, and many believe that their current strategy is failing them.
"Some providers intend to launch an entirely new cloud IaaS platform, make substantial changes to their current platform or move to providing managed services on leading cloud IaaS platforms," according to a statement.
"Many providers have indicated that they intend to discontinue or significantly reduce their investment in their cloud IaaS offerings, and others intend to eliminate or replace them. Leong said Gartner was urging buyers to be extremely cautious when selecting providers.
"Ask specific and detailed questions about the provider's roadmap for the service, and seek contractual commitments that do not permit the provider to modify substantially or to discontinue the offering without at least 12 months' notice," she said. Market share has also continued to become more heavily concentrated, even while the market has grown dramatically.
Although 15 providers featured in Gartner's new "Magic Quadrant for Cloud Infrastructure as a Service, Worldwide," the market is dominated by only a few global providers -- most notably Amazon Web Services, but increasingly also Microsoft Azure and Google Compute Engine".
Between them, these three providers comprise the majority of workloads running in public cloud IaaS in 2015. In 2014, the absolute growth of public cloud IaaS workloads surpassed the growth of on-premises workloads (of any type) for the first time.
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