6 Reasons Why The Public Cloud Is An Opportunity For Channel Partners

As public cloud services revenue continue to soar, so too do the opportunities for solution providers willing to invest in bringing services to their customers from the likes of Microsoft Azure, Amazon Web Services, and Google Cloud.

Opportunity Almost Without Boundaries

The public cloud offers a wide range of opportunities for solution providers who make the investment needed to bring cloud services to their clients. The market, and in particular the top three vendors--Amazon Web Services, Microsoft Azure, and Google Cloud--are expanding not only their services, but also the infrastructure needed for solution providers to bring those services to market.

CRN, and its sister organization, the Channel Company's IPED consulting group, is keeping a close watch on the public cloud, especially as it pertains to the channel. In this slideshow, the growth of the public cloud and specific services is examined via recent reports by analyst firms Gartner and IDC showing the massive growth of public cloud services spending expected over the next few years.

Following that, we look at how that growth is and will specifically impact the channel with information from IPED's latest research, which was originally presented at the Channel Company's XChange 2019 conference in March.

Wondering about how the cloud might impact your business? Stop wondering, and turn the page.

6. Public Cloud Services Revenue Growth To Remain Strong Through 2022

The next four years are expected to see a massive growth in public cloud services spending. Analyst firm Gartner in April of 2019 estimated that total worldwide public cloud services revenue is expected to reach $331.2 billion in 2022, about 82 percent higher than the $182.4 billion Gartner estimated for 2018.

Infrastructure as a service, or IaaS, will be the fastest-growing public cloud service between 2018 and 2022, with revenue expected to rise about 151 percent during that time to $76.6 billion, Gartner said.

Platform as a service, or PaaS, revenue is expected to grow about 104 percent during that time to reach $31.8 billion.

Software as a service, or SaaS, revenue will continue to be the largest of the five services components by far, reaching $143.7 billion by 2022, up about 80 percent over the 2018 revenue.

They will be followed in growth by cloud management and security services, up 70 percent by 2022 to $17.9 billion, and business process as a service, or BpaaS, up 33 percent to $61.1 billion, Gartner said.

5. 2019 Spending On Public Cloud Services To Reach $160 Billion

Analyst firm IDC in February predicted that worldwide spending on public cloud services and infrastructure should reach $160 billion in 2019, up nearly 24 percent from 2018, with spending growth to be slightly lower going forward to reach about $370 billion in 2022.

IDC estimated that spending by the professional services, discrete manufacturing, and banking industries on public cloud services will each be over $20 billion in 2018, totaling about one-third of the total spending. They will be followed by the process manufacturing and retail industries at over $15 billion each.

Spending on public cloud services by the professional services will grow the fastest between 2018 and 2020 at a cumulative annual growth rate of 26.4 percent, followed by retail and by personal and consumer services, both at 24.0 percent, IDC estimated.

The U.S. will continue to be the largest public cloud market in 2019, with spending forecast to be $124.6 billion, followed by China at $10.5 billion, the U.K. at $10.0 billion, Germany at $9.5 billion, and Japan at $7.4 billion, IDC said. Between 2018 and 2022, China will see the fastest growth.

4. Public Cloud Platform Experiences Dramatic Growth

IPED said that Microsoft Azure, Amazon Web Services, and Google Cloud are all experiencing dramatic revenue growth thanks in part to help from channel partners.

IPED estimated Microsoft Azure's 2018 annual commercial cloud business revenue to be about $23 billion, up 56 percent over the previous year. The commercial cloud revenue primarily comprises Microsoft Office 365 commercial, Microsoft Azure, Microsoft Dynamics 365, and other cloud properties, IPED said.

AWS had a $25.6-billion business in 2018 with a 47-percent growth rate, while Google Cloud, including G Suite, was a $4-billion business with a double-digit growth rate, IPED estimated.

3. Public Cloud Providers Seen As Strategic Suppliers To The Channel

All three public cloud providers are seen as strategic suppliers to solution providers based on their go-to-market strategies including sales, marketing, and technical programs, IPED said.

According to a recent IPED survey of 639 solution providers, Microsoft Azure was called a strategic supplier by 44 percent of respondents, compared to 34 percent who called AWS a strategic supplier and 17 percent who said the same for Google Cloud.

2. Booming Demand For Public Cloud Services Via The Channel

IPED said that 52 percent of channel partners surveyed said they expect to see moderate to high growth in demand for public cloud services over the next 12 months, compared to only 45 percent who experienced moderate to high growth in the prior 12 months.

Thanks in large part to their growing public cloud business, about 50 percent of solution providers identify managed service provider as their primary or secondary business model. About 70 percent of solution providers reported recurring revenue as a significant part of their strategy, IPED said.

Services including cloud consulting, professional services, project management, and software-as-a-services offerings now account for about 65 percent of solution providers' revenue compared to only 48 percent six years ago, IPED said.

1. Public Cloud And Distributors

IT distributors in general do not break out the part of their revenue tied to the cloud, but have provided a couple clues related to growth of their cloud business.

A Tech Data spokesperson told CRN via email that it does not publicly break out its cloud revenue, but did say that the company is seeing its public cloud revenue grow by over 50 percent per year.

A Pax8 spokesperson told CRN via email that, as a private company, it does not provide any revenue numbers. However, the spokesperson said, Pax8 is on average enabling one to two 1-2 MSPs per day adopt a public cloud solution into their product suite.