10 must-watch IaaS cloud trends for 2017

Enterprises go heavy and hard to the cloud as machine learning, serverless computing and containers advance

By Brandon Butler
Dec. 20, 2016

Analysts who track the IaaS public cloud computing market tend to agree that 2016 was a year that solidified the positioning of three vendors: Amazon Web Services, Microsoft Azure and Google Cloud Platform, and marked a major transition point in enterprises using them.

These companies gave customers more choices of where to host their data around the globe, more virtual machine instance sizes to optimize their workloads and new ways to manage and analyze data that’s already in the cloud.

And enterprises became more and more comfortable using them. More companies committed to shutting down data centers and moving their most important applications to IaaS.

So what trends will define 2017? Here are 10 that will define 2017 in the IaaS cloud market:

1. Revenues continue to climb

On a macro level, Forrester Research estimates the cloud market overall is expanding at a 22% compound annual growth rate and is expected to hit $146 billion by the end of 2017. That’s up from $87 billion in 2015 and the market’s on its way to $236 billion by 2020. Infrastructure and platform clouds are expected to be a $32 billion market in 2017, growing at a 35% CAGR, which is faster than the SaaS market.

AWS could hit $13 billion in revenues, while Forrester believes Microsoft Azure is about two or three times smaller (Microsoft does not break out its Azure revenues) and Google is between a half billion and $1 billion. “We had to update our forecast,” says Forrester analyst Dave Bartoletti. “It’s growing faster than we expected in 2014.” Cloud is being adopted at a faster rate than virtualization was back in the day. Expect this meteoric growth to continue through 2017.

2. Dawn of Cloud 2.0

Given this massive growth, IDC Chief Analyst Frank Gens believes the industry is at the dawn of a Cloud 2.0 stage. It’s moving beyond experimentation toward mass enterprise adoption. By 2018 Gens predicts that 60% of enterprise IT workloads will be off-premises; 85% of enterprises will commit to a multi-cloud architecture model and by 2020 over 70% of cloud service provider revenues will be mediated by channel partners/brokers. “Even for those enterprises already familiar with the cloud, it will be a new challenge to get ready for these significant changes in what clouds are, and are able to do,” Gens says. “The market's assumptions about (and use cases for) the cloud — as it becomes more distributed, trusted, intelligent, and industry specialized — will greatly expand."

3. Machine Learning/AI

If there is one trend that is expected to dominate cloud vendor priorities in the upcoming year it is machine learning and artificial intelligence. All three of the major vendors made big announcements in 2016 related to this field. Google released TensorFlow, an open source machine-learning platform. Microsoft introduced a cloud-based platform for machine learning and Amazon announced three new machine learning services at is re:Invent conference. Expect the drumbeat of ML and AI news to continue into 2017, with this technology becoming easier for everyday developers to use and integrate into applications they’re building atop these cloud platforms.

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