The IT channel, including global systems integrators, managed service providers (MSPs), resellers and distributors, is playing an increasingly important role in driving the growth of the cloud industry around the world, as the market hits new heights.
This is according to industry analyst firm Canalys, which claims that total cloud services market expenditure in the three months ending 31 December 2020 was over US$3 billion higher than the prior quarter, and nearly US$10 billion more than Q4 2019.
All up, cloud infrastructure services spending increased 32 per cent to US$39.9 billion in the last quarter of 2020, following heightened customer investment with the major cloud service providers and the technology channel, according to Canalys.
Canalys defines cloud infrastructure services as services that provide infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared infrastructure.
This increase is the largest quarterly expansion in dollar terms, the analysis claimed.
For the full-year 2020, total cloud infrastructure services spending grew 33 per cent to US$142 billion, up from US$107 billion in 2019.
Demand was higher than expected, despite an initial slowdown in large consultative-led projects, Canalys said, noting that continuing pandemic restrictions drove intense demand for cloud to support remote working and learning, e-commerce, content streaming, online gaming and collaboration.
And if Canalys’ analysis is anything to go by, the channel played a pretty important role in this rampant growth.
The analyst firm pointed out that all the major cloud providers are increasing their investments in the channel in a bid to leverage the consulting and managed services capabilities of partners, and to expand sales capacity to drive cloud consumption.
Moreover, cloud providers are set to further extending their investments in channel partnerships to maintain high demand rates and support customers, which will be critical for implementing projects in 2021 and beyond.
While Microsoft holds the largest share of the indirect channel with Azure, Canalys claimed, Amazon Web Services (AWS) and Google Cloud are gaining ground in this respect.
Compounding the partner influence in global cloud growth is the fact that, as businesses deploy different workloads across public, private and edge cloud infrastructures, they’re often looking for independent partners with capabilities across multiple cloud providers.
“Organisations are turning to trusted business partners to advise, implement, support and manage their cloud journeys, and articulate the real business value of cloud migration,” Canalys chief analyst Alastair Edwards said.
“Customer digital transformation projects are highly complex, requiring advanced consulting skills, combining deep technical skills with vertical expertise, which the cloud service providers are relying on partners to provide at scale.
“They are also turning to their partners to drive cloud consumption, and deliver full customer lifecycle support. As organisations start to consider moving more mission-critical workloads to the cloud, they will look to partners to define the right cloud platforms and strategies, as well as solve the most pressing issues around cost management, security, sovereignty and hybrid IT integration,” he added.
The big get bigger, again
Although Microsoft might be the cloud provider with the highest levels of channel engagement across the board, AWS continues to hold its title as the undisputed leader in terms of sheer market share.
As AWS CEO Andy Jassy, the architect behind the world’s largest cloud provider, prepares to transition to a new role leading parent company Amazon, the business he’s built over decades has delivered another quarter of impressive growth.
Indeed, AWS accounted for 31 per cent of total spend in the market during the fourth quarter.
“After a mixed Q3 in terms of customer performance, AWS had a resurgence in customer investment,” Canalys said in a blog post. “This fueled 28 per cent growth year on year for AWS in cloud in Q4 2020.
“AWS is making investments across its global partner ecosystem to sustain its momentum, including greater support for ISVs, launching new vertical partner competencies, further expansion into distribution to boost SMB adoption, and new partnerships as it extends its hybrid cloud strategy,” it added.
Microsoft’s Azure growth rate, meanwhile, accelerated once again, up by 50 per cent to boost its market share in the global cloud services market to 20 per cent.
This comes after some intense focus by Microsoft on driving Azure consumption across all customer segments through annuity sales programs and customer success investments, as well as targeted incentives for its global partner channel.
It has also enjoyed continued demand for Teams, Windows Virtual Desktop and other Microsoft services running on Azure as pandemic-prompted lockdowns tightened.
Google Cloud, which released its fourth quarter results on the same day as Amazon, came in as the third largest cloud service provider in the quarter, with a 7 per cent share of the market. This equated to growth of 58 per cent in Q4 2020.
For its part, Google Cloud has aligned its sales force and channel to specific industries as it builds a partner network with industry-specific expertise and deep specialisations in its priority solutions, such as machine learning, analytics and data management, according to Canalys.
At the same time, Alibaba Cloud grew by 54 per cent in Q4 2020, accounting for 6 per cent of the total market.
While not the leader on the global stage, Alibaba Cloud remained the leading cloud service provider in the Asia Pacific region, including China.
The company updated its hybrid cloud strategy during the quarter with the launch of its Hybrid Cloud Partner Program and on-premises appliances targeting small and medium-sized businesses, Canalys noted.