It was a rough quarter for the cloud infrastructure market as businesses sought ways to cut spending in an uncertain economy. It slowed to 21%, down sharply from the previous year’s 36% growth.
Despite the lack of flashy growth over the past few years, Synergy Research found the market surpassed $61 billion in the quarter, with over $212 billion in 12-month trailing revenue.
It’s also worth noting that while each of the Big Three saw growth slow from the previous quarter in Q4 2022, Microsoft was still able to capture market share on Amazon. Microsoft increased its share to 23% from 21% last quarter, Amazon fell to 33% from 34%, and Google remained stable at 11%. The Big 3 cloud providers account for his 66% of global cloud revenue.
This equates to approximately $20 billion for Amazon, $14 billion for Microsoft, and $7 billion for Google. Typically, this focuses on IaaS, PaaS, and hosted private cloud services. Does not include SaaS, which is measured separately.
Image credit: Synergy study
Amazon cloud revenue grew just 20% year-over-year. In its earnings call, the company admitted that its growth slowed further in the first month of the year, reaching its mid-teens. Meanwhile, Microsoft reported cloud growth of 22%, down from 24% last quarter, and Google Cloud revenue up 32%, down from 38% growth last quarter.
Amazon was the first to enter the market and got off to a head start, but the market appears to be slowing down after years of steady growth. This may be partly due to the fact that maturity is finally catching up, giving Microsoft some edge despite an overall slowdown in spending.
Synergy Chief Analyst John Dinsdale said there were three main reasons for this quarter’s decline, he believes it’s a short-term problem, and he’s optimistic about the future. “There are three main drivers: A stronger US dollar will reduce the apparent growth rate of many non-US markets. The large Chinese market remains constrained by pandemic issues and local policies. The economic downturn has also caused some companies to take a closer look at their spending on cloud services.These factors are largely short-term in nature, and Synergy expects to We expect continued strong growth,” he said in a statement.
It will be interesting to watch the market in 2023 and see how the macroeconomic environment affects earnings. It will also be interesting to see if the slowing growth so far continues to work in its favor by allowing Amazon’s competitors to gain more ground.
