Cloud Spending Growth Rate Slows But Q4 Still Up By $10 Billion from 2021; Microsoft Gains Market Share

RENO, NV, February 6, 2023

New data from Synergy Research Group shows that Q4 enterprise spending on cloud infrastructure services exceeded $61 billion worldwide. While this was up by well over $10 billion from the fourth quarter of last year, it did reflect a reduction in the market growth rate. The 21% growth over Q4 of 2021 was again substantially hampered by the historically strong US dollar and a severely restricted Chinese market. Looking solely at the US market, which largely circumvents those two issues, the Q4 growth rate was 27%, which compares with an average growth rate of 31% in the previous four quarters. That reduction in growth rate was partly to be expected due to the increasingly massive scale of the market, but there is no doubt that the current economic climate also had an adverse impact. Among the largest cloud providers Microsoft saw a strong uptick in its worldwide market share which has now reached 23%, compared to an average 21% in the previous four quarters. Meanwhile market leader Amazon stayed within its long-standing market share band of 32-34%, while Google share stood at 11%, in line with the previous quarter but a percentage point up from a year ago. In aggregate the three leaders accounted for 66% of the worldwide market, up from 63% a year ago. With most of the major cloud providers having now released their earnings data for Q4, Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $61.6 billion, with trailing twelve-month revenues reaching $227 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 22% in Q4. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three control 73% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world.

Despite the challenging environment, the full-year 2022 worldwide market grew by $47 billion from the previous year, almost matching the $49 billion growth achieved in 2021. As economies improve and the foreign exchange market stabilizes, Synergy forecasts that the worldwide cloud market will continue to grow strongly over the coming years.