Worldwide public cloud services continue to rise, with Gartner forecasting the sector will reach $260 billion for the year 2017. The market research firm said that strong SaaS and IaaS performance is driving growth for the calendar year. The latest report projected the market to grow by 18.5 per cent year-on-year to total $260.2 billion, up from $219.6 billion last year.
"Final data for 2016 shows that software as a service (SaaS) revenue was far greater in 2016 than expected, reaching $48.2 billion," said Sid Nag, research director at Gartner. "SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public cloud revenue forecast."
He added: "Strategic adoption of platform as a service (PaaS) offerings is also outperforming previous expectations, as enterprise-scale organizations are increasingly confident that PaaS will be their primary form of application development platform in the future. This accounts for the remainder of the increase in this iteration of Gartner's public cloud services revenue forecast."
SaaS revenue is expected to grow 21 per cent in 2017 to reach $58.6 billion, as the acceleration in SaaS adoption can be explained by providers delivering nearly all application functional extensions and add-ons as a service.
The highest revenue growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 36.6 per cent in 2017 to reach $34.7 billion.
Although public cloud revenue is growing more strongly than initially forecast, Gartner still expects growth even out from 2018 onwards, to reflect the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix. In terms of vendor share, Gartner expects 70 per cent of public cloud services revenue to be dominated by the top 10 public cloud providers through 2021.