Global spending on cloud infrastructure services reached US$73.5 billion in Q3 2023, a 16% year-on-year increase, according to market research from Canalys. Q3 growth remained consistent with the previous quarter. The impact of enterprise IT spending cuts on the cloud services market is slowly easing. In Q3 2023, the top three cloud providers – AWS, Microsoft Azure, and Google Cloud – jointly grew by 20%, slightly outpacing the overall market and accounting for 65% of total spending. AWS mirrored its performance in the previous quarter, while Microsoft saw an uptick in its growth rate. Google Cloud, however, saw a drop in its rate in Q3 2023, according to Canalys.
While the broader market continues to grapple with the repercussions of cost-cutting behavior, the performance of the leading cloud vendors hints at a shift in the market dynamic, according to the report. Growing demand for AI solutions is gradually offsetting the impact of reduced IT spending as enterprises begin to invest in cloud computing to support AI strategies.
“Generative AI unlocks a wealth of opportunities for channel partners to venture into new areas of business growth,” said Alex Smith, VP at Canalys. “The big cloud players and their partners can seize this exponential growth opportunity by identifying customers with an appetite for AI solutions, while simultaneously strengthening their AI capabilities and offering comprehensive portfolios of AI-related products and services to address these evolving needs.”
Amazon Web Services (AWS) continued to dominate the cloud infrastructure services market in Q3 2023, with a stable market share of 31%, and year-on-year growth of 12%. Microsoft Azure held second place in the cloud infrastructure services market in Q3 with a 25% market share. Following seven consecutive quarters of slowing year-on-year growth, it saw an uptick in its growth rate, which was up 29% compared with Q3 last year. Google Cloud reached a market share of 10% in Q3 2023 after growing 24% year on year, securing third place in the cloud infrastructure services market.
Canalys defines cloud infrastructure services as those services that provide infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared public infrastructure. This excludes software-as-a-service expenditure directly but includes revenue generated from the infrastructure services being consumed to host and operate them.
To succeed in this rapidly evolving landscape, channel partners must stay ahead of the game by establishing robust AI strategies and investing in strategic AI partnerships.”