Smaller IaaS market players are losing out to their bigger rivals with Amazon claiming the greatest share, according to Gartner.
Amazon remained the top vendor in the IaaS market in 2018, followed by Microsoft, Alibaba, Google and IBM. Combined they accounted for almost 77% of the global IaaS market, up from less than 73% in 2017, noted Gartner in a new report.
Overall, the worldwide IaaS market grew 31.3% in 2018 to total $32.4bn, up from $24.7bn in 2017.
Amazon accounted for nearly half of the total with an estimated $15.5bn revenue in 2018, up 27% on 2017. Microsoft's IaaS revenues surpassed $5bn in the period, up from $3.1bn.
"Despite strong growth across the board, the cloud market’s consolidation favours the large and dominant providers, with smaller and niche providers losing share,” said Sid Nag, Research Vice President at Gartner.
“This is an indication that scalability matters when it comes to the public cloud IaaS business. Only providers that invest capital expenditure in building out data centres at scale across multiple regions will succeed and continue to capture market share.
"Offering rich feature functionality across the cloud technology stack will also be the ticket to success.”
Gartner says market consolidation will continue through 2019, driven by the high rate of growth for the top providers, which experienced aggregate growth of 39% from 2017 to 2018 compared with the more modest growth of 11% for all other providers during the same period.
“Consolidation will occur as organisations and developers look for standardised, broadly supported platforms for developing and hosting cloud applications,” added Nag.