Public cloud spending surged to $670 billion in 2023 – IDC

Global spending on public cloud services jumped 19.9% year-on-year to reach a whopping $669.2 billion in 2023.

June 10, 2024

2 Min Read

This is according to new numbers from IDC, which predicts that spending this year will grow by 20.5 percent to reach $800 billion. By 2028, that figure is expected to weigh in at a staggering $1.6 trillion.

Unsurprisingly, AI is the main catalyst for this explosive growth, despite the risks it continues to pose.

"The mainstreaming of AI is driving organisations to rethink their infrastructure strategy," said Dave McCarthy, IDC research vice president covering cloud and edge infrastructure services.

"Public cloud IaaS will be an attractive source for AI-ready infrastructure as cloud service providers are heavily investing in the high-performance compute, storage, and networking services needed for AI workloads," he said. "The on-demand and pay-as-you-go tenets of cloud infrastructure facilitate access to the latest AI technology without large upfront investments or supply chain delays."

The demands that AI places on compute resources appears to favour suppliers that can afford the best hardware.

Microsoft and Amazon Web Services (AWS) accounted for 16.8% and 12.4% respectively of public cloud revenue last year. They have a commanding lead over third-placed Salesforce (4.5%), while Google (4.4%) sits fourth. Oracle (2.4%) completes IDC's top five.


Such is the dominance of Microsoft and AWS that they are currently the subject of a UK Competition and Markets Authority (CMA) investigation into the supply of public cloud infrastructure. Last week, the watchdog outlined potential market remedies but ruled out forced structural and operational separation.

IDC splits out the public cloud services market into four categories: infrastructure-as-a-service (Iaas), platform-as-a-service (PaaS), software-as-a-service (SaaS) applications, and SaaS system infrastructure software.

As the chart shows, SaaS applications account for the single biggest chunk of revenue – almost 45%, or $298.5 billion. However, thanks to AI, PaaS is the fastest-growing segment, with revenue jumping 29.3% to $123.3%.

"In large part due to end-user investment in AI, PaaS revenue growth continues to outpace the overall cloud market," said Adam Reeves, research director of PaaS for developers of modern and edge applications. "Both market share-leading vendors and smaller providers continue to release PaaS-delivered AI offerings. Vendors are focused on being strategic partners to their customers by delivering highly performant, developer-friendly, trustworthy, and secure offerings that help users deliver intelligent applications more efficiently."

When it comes to IaaS and PaaS, the big hyperscalers enjoy an even more dominant position.

According to separate figures from Synergy Research, AWS, Microsoft and Google together hoovered up 72% of spending on IaaS and PaaS in the first quarter of the year.

Meanwhile, IDC's numbers are even more bullish than Gartner's, which last month predicted that overall public spending will reach $675.4 billion this year, topping $824 billion in 2025. Similarly to IDC, Gartner also reckons that – thanks largely to generative AI (GenAI) – the trillion dollar milestone will be reached before the decade is out.

That's an awful lot of money to spend on a technology that might ultimately work against humanity's best interests.

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