Australian IaaS market hits $2.6 billion

The Australian infrastructure as a service (IaaS) market revenue grew to $2.68 billion in 2022, up 37.1 per cent since 2021, analyst firm Gartner has found.

The top five IaaS providers made up 89 per cent of the Australian market.

Amazon retained the top IaaS position with 31.9 per cent market share, followed by Microsoft (29.8 per cent), Google (19.7 per cent), IBM (4.5 per cent) and Alibaba (3.1 per cent).

In comparison, the global IaaS market grew 29.7 per cent in 2022, to US$120.3 billion, up from US$92.8 billion in 2021.

While Amazon, Microsoft, Alibaba and Google held positions in the top five IaaS providers in both Australia and globally, Huawei took the fifth spot in the world, due to its increased focus on cloud in China and emerging markets.

“IaaS remains the engine of growth in the Australian IT market, showing no signs of slowing down."

"Alongside modernisation, it forms the two pillars of ongoing digital transformation,” Gartner vice president analyst Michael Warrilow said.

“However, increased cloud spending is driving greater scrutiny from the business. CIOs will need to invest in FinOps to ensure they don't blow the budget,” he said.

Google saw the highest growth rate of the top five IaaS vendors, growing 41 per cent in 2022 to reach over $9 billion in revenue.

According to Gartner, this is due to Google’s increased investment in sovereign cloud and expanded sales and marketing partner programs which helped to broaden its customer base and drive additional IaaS revenue.

“IaaS growth in 2022 was stronger than expected, despite a slight softening in the fourth quarter as customers focused on using their previously committed capacity to its fullest potential," Gartner vice president analyst Sid Nag said.

“This is expected to continue until mid-2023 and is a natural outcome of the market’s maturity."

"We expect an acceleration in 2024, as there is still room for plenty of additional future growth,” he added.

“As enterprises integrate generative AI into their technology portfolio, new markets and opportunities for cloud hyperscalers will emerge related to sovereignty, ethics, privacy and sustainability,” Nag said.