Published on November 9, 2023, 2:47 am

The public cloud market is projected to reach more than US$1 trillion worldwide by 2026, according to Forrester’s Public Cloud Market Outlook, 2022 To 2026 report. However, the road to maturity for this market will face several challenges.

For one, intense competition among the largest cloud providers is expected. Additionally, regulatory and political tensions may lead to market fragmentation. Another factor influencing the market is the increasing share of IT spending captured by edge computing vendors in relation to the cloud.

While hyperscalers—the largest companies aiming to dominate the public cloud and cloud services industries—will continue to battle commoditization pressures on infrastructure services, they will also invest in technologies like custom microchips and advanced wireless networking. These investments are meant to match competitors’ offerings and retain customers by offering higher-priced services.

To maintain their influence over the public cloud market, hyperscalers and providers need to prioritize major investments in differentiated premium services. One such area is database and analytics fueled by customer demand for AI/ML. As customers seek AI and machine learning for product innovation and operational efficiency, revenue from database and analytics services is predicted to triple to US$89.5 billion by 2026. Cloud AI platforms will drive revenue increases in these services.

Cloud-native technologies will also gain greater influence as they become increasingly integrated into AI/ML standards. Kubernetes is expected to become the de facto standard for IT infrastructure in the cloud.

Another area of investment focus should be development services that attract more coders. This market segment’s revenue is projected to rise to US$51 billion by 2026. Factors such as serverless becoming integral to app development on cloud platforms, automation, and integration of low code into cloud development will fuel this growth.

While the non-hyperscaler dominated cloud applications market is predicted to reach saturation at nearly US$397 billion by 2026, hyperscalers will still aim to strengthen their SaaS offerings and become the preferred hosts for SaaS.

Lee Sustar, principal analyst at Forrester, emphasized that the public cloud market has experienced significant growth despite pandemic-induced challenges. He stated that this growth is set to continue into 2026. However, hyperscalers and providers will face competitive pressure to make massive investments in services such as database and analytics, development services, and SaaS while keeping up with infrastructure investment to match their rivals’ innovation.

Ensuring differentiated cloud services will be crucial for sustained growth in the coming years.

Reference:
Differentiated cloud services are a must for growth into 2023. FutureCIO.

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