According to Gartner, spending on public cloud services reached $396 billion last year, a 26% increase from the previous year. And the trend is set to continue with an expected 21.7% hike in 2022. But what does this growth look like on the ground? How did it impact business in the past year, and what can it reveal about the future of the cloud market? Let’s dive into some cloud business trends from 2021.
1. More data centers
On the ground, we can see the major players rushing to grow and offer new data centers. They're opening new data centers to house the influx of new customers who need data and accompanying services. In 2021, we saw several new regions deployed by the three major providers (AWS, Azure, and GCP), proving the trend is real. AWS plans on opening eight new regions to add to their 25 already-active regions (+32%); Azure will add 16 regions to their 47 active regions (+34%); GCP has plans for ten new regions, on top of their 29 existing regions with at least three zones that already provide active service (+34%). Call it a growth spurt - or just generating supply to meet demand- but the business-growth case for public cloud services is evident.
2. New neighbourhoods
Historically, data centers have been clustered in North American and Western Europe, but new regions are popping up to serve more emerging markets in South America, the Middle East, and Southeast Asia. Cloud providers are investing heavily in Asia and the Middle East because there is more free and cheaper space availability; all three providers have data centers planned to open in the Arabian Peninsula. More centers are planned in China, Indonesia, Israel, India, Japan, Australia, and New Zealand. This demonstrates perfectly how the cloud market is truly global. Access to services is not limited to traditional markets and players. Moreover, mobility within the sector is growing, with opportunities ripe for businesses on nearly every corner of the globe.
3. Technology for all
Besides the physical expansion of new data centers in new regions, 2021 also saw many new services offered. The main difference from services that were offered in the past is that these services tend to target more niche areas; Cloud providers continue to offer storage and basic computing, but they're opening an entire vault of advanced technological services to businesses across the globe, including abilities that were only available to enterprises before.
Businesses can now easily train and implement computer vision models; they can use comprehensive machine learning platforms and apply voice recognition to make support center voice interactions faster and more secure. They can develop and deploy apps faster and can offer semantic search capabilities to end-users based on intent, not just key works. Other new services include advanced spelling support to promote accuracy and personalization for customers conversing with chatbots.
The list goes on and on, but the trend is clear: the public cloud in 2022 will have more services for businesses of every shape, size, and business model.
4. No major shifts in market share
There were no major changes in 2021’s cloud market share. In 2022, the three major players (AWS, Azure, and GCP) will likely continue to dominate the public cloud market (in that order.) These providers are all investing huge amounts of capital in expanding their business through new regions and services. The stakes are high, and it would take an enormous investment to try and make a small dent in the current business landscape.
Some public cloud providers on the sideline trying to shake up the current hegemony are IBM and Oracle. Perhaps even Alibaba will be able to break out of the Chinese market to impact the global public cloud arena. But as of now, there are no signs such change will occur. AWS, Azure, and GCP will continue to dominate the public cloud.
So, what's the bottom line that emerges from these four trends in terms of business and risk in the future? Cloud downtime will continue to challenge businesses.
Cloud dependency will continue to dominate the business landscape. Companies will embrace the affordability of cloud computing, the access to every conceivable technological advancement, the state-of-the-art security, and the ability to scale faster.
However, greater dependency introduces a growing risk factor that needs to be addressed. Heavy reliance on third-party IT services means companies are at the grace of their providers. This new risk factor should not cause alarm or fear, as downtime can be damaging to a business, but it's certainly manageable. Businesses need to set up their infrastructure to suit their uptime needs. They can include redundancy across regions or carriers and build a contingency plan. They may also consider cloud-downtime insurance. These may all carry hefty price tags, but they must be considered to promote business continuity.
Written by Neta Rozy, co-founder and CTO of Parametrix Insurance.