In the first quarter of 2022, global spending on cloud infrastructure services increased by 34% year-on-year to reach $55.9 billion, and enterprises are responding to the challenges of the market by making digital a top strategy for development. Overall spending on cloud services increased by $2 billion from the previous quarter and $14 billion from the first quarter of 2021, according to the latest statistics from Canalys. The three largest cloud service providers, AWS, Microsoft and Google, benefited from increased adoption and expansion of cloud computing, and their combined spending accounted for 62% of global consumer spending, an increase of 42% year-on-year.
With global supply chain shortages, cybersecurity threats, and geopolitical instability escalating, cloud business transformation has become a top priority for businesses. Currently, enterprises of all sizes and vertical markets are transitioning to cloud services to flexibly meet these challenges. Small and medium-sized businesses, in particular, are beginning to increase their investment in cloud infrastructure services to support workload migration, data storage services, and the development of cloud-native applications. At the same time, the threat of infrastructure hardware shortages and escalating costs has spurred many large enterprises to focus on long-term, high-volume cloud service contracts. Enterprises see it as an investment to ensure long-term upfront discounts from leading cloud vendors. As a result, the backlog of orders for all major cloud service providers has increased significantly, and the total global order book is now in the hundreds of billions of dollars. This has also made cloud vendors an important third-party software sales channel, because corporate customers can choose to consume third-party software on the cloud vendor’s application platform if they cannot reach the expected consumption amount through infrastructure services when fulfilling their commitments.
Blake Murray, research analyst at Canalys, said: “Cloud computing has been a hot market, and companies are emphasizing digital resilience in their strategic transformation to meet current and future market challenges. To be more effective in resiliency planning, and efficient large-scale adoption of cloud services , the customer base is shifting to working with channel partners with both technical and consulting capabilities.”
Leading cloud service partners are actively carrying out certification work and recruiting technical talents around ultra-large-scale cloud services. System integrators including Accenture, Atos, Deloitte, HCL Technologies, Infosys, Kyndryl, TCS, Tech Mahindra and Wipro will be involved with tens of thousands of cloud engineers and consultants. This also includes recruiting cloud application development and migration experts, as well as launching a new proprietary cloud service brand. Some small consulting firms, resellers, service providers and distributors have also adopted such strategies to meet the demand for cloud computing services from end-market and SME customers.
Yi Zhang, research analyst at Canalys, said: “As cloud infrastructure services become more widely used and the underlying complexity increases, hybrid cloud and multi-cloud service deployments are becoming more common in the market. Leading cloud service vendors are vigorously Investing in rapid channel expansion. Partners are responding aggressively as opportunities grow.”
In the first quarter of 2022, Amazon Web Services (AWS) took the top spot as a cloud service provider, accounting for 33% of total spending, up 37% year-over-year. Amazon continues to expand its global presence, launching local regional services in 16 U.S. cities and announcing future plans to launch the service in 32 cities in 26 countries. AWS announced that they have won several key customers, mainly telecommunications companies such as T-Systems, Verizon and Telefónica. AWS has also stepped up its partnership with Tech Mahindra to build an automation platform to help such telcos increase their adoption of 5G networks.
The second-ranked cloud service provider in the quarter was Microsoft Azure, which grew 46% year-over-year and accounted for 21% of the market. This growth was driven by a surge in high-volume, long-term cloud service contracts. Compared to the first quarter of last year, Microsoft Azure doubled the number of orders over $100 million. Microsoft last month announced a new cloud services partner program to boost Azure business, which will officially launch in October. The new channel program “New Commercial Experience (NCE)” has made drastic (and controversial) changes from its original foundation, and its solution provider partnership program has entered the second phase of deployment, adapting Azure products and new partner points and incentives. Microsoft also announced key collaborations with global system integrators such as Atos and Fujitsu.
The fastest growing among the top three is Google Cloud, with a year-on-year growth of 54% and a market share of 8%. Its product Google Cloud Platform (GCP) has long-term focus on areas such as digital sovereignty, data analysis, artificial intelligence and cybersecurity, forming its key differentiating advantages. To this end, Google will acquire Mandiant to advance the practice of cloud cybersecurity, which is scheduled to close in the second half of this year. The company is investing heavily around the world to expand the global reach of regional data centers, while working with companies like Mandiant to migrate data centers to GCP. In addition, with its first-quarter loss as high as $931 million, Google Cloud has been actively working with channel partners to seek opportunities to expand customer reach, operating scale and improve sales efficiency to reduce the operating loss of its cloud business. The company also announced a restructuring plan to bring its ecosystem and channel sales teams together and committed to doubling down on partner co-marketing, training, and other ecosystem-building initiatives over the next few years.