Global cloud services spending increased 35 per cent to $49.4 billion in Q3 of 2021, according to a report by Canalys.

The report said, cloud infrastructure services continue to remain in high demand with spending driven by a host of factors, including ongoing remote working and learning, and the growing use of industry-specific cloud applications.

According to Canalys estimates, expenditure has grown $12.9 billion over Q3 2020 and $2.4 billion since last quarter.

Spending on cloud services is still largely impacted by the digital transformation efforts required to maintain business continuity during pandemic-related disruptions.

In response, the major cloud services providers have emphasised geographic data centre expansion to meet rising demand, the report said.

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However, the impact of the global chip shortage is weighing on service providers as data centre component providers are seeing longer lead times and higher prices that will be passed on to the largest providers.

“The hyperscalers have now shifted focus to advancing industry-specific service portfolios and growing their channels to successfully bring these increasingly diverse sets of products to market,” the report said.

“Overall compute demand is out-growing chip manufacturing capabilities, and infrastructure expansion may become limited for the cloud service providers,” said Canalys Research Analyst Blake Murray.

“Besides managing supply chains to the best of their abilities, the providers building an advantage are focused on developing their go-to-market channels along with their product portfolios to catch up with an increasingly wide variety of customer use cases that has fuelled demand since the start of the pandemic,” Murray added.

Top players

Amazon Web Services (AWS) topped the list of top cloud service providers, accounting for 32 per cent of total cloud infrastructure services spend in Q3 2021, making it the leading cloud service provider. It grew 39 per cent on an annual basis.

“AWS recently announced AWS for Health, which combines industry-specific offerings with cybersecurity and compliance solutions. It has been successful in the public sector, winning key deals with US and UK governments. It has also led channel development through its competency programmes, with its government competency becoming the largest industry-focused competency among its partners,” the report said.

Microsoft Azure came in second with a 21 per cent market share. It grew over 50 per cent for a fifth consecutive quarter. The tech giant continued to focus on industry cloud service customisations and expanded capabilities in financial services and manufacturing.

“It also reported new customer success in its cloud service suites for healthcare and sustainability. Microsoft has worked on its position around data governance and also announced Azure Purview, a unified data solution designed to support data management in multi-cloud environments,” per the report.

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Google Cloud was the third-largest provider, growing 54 per cent to account for 8 per cent of the market. It announced 20 expanded technology partnerships with data and cybersecurity companies to deepen vertical expertise. Google Cloud has also been bullish on its channel partners and has released new incentives in its partner program. It advertised a 175 per cent increase in customer engagements through partners during the first half of 2021, as per the report.

“It also advanced its positioning around data sovereignty with the release of Google Distributed Cloud, which gives customers options to extend Google Cloud’s infrastructure to the edge and customer data centres,” it said.

Canalys defines cloud infrastructure services as those that provide infrastructure as a service and platform as a service, either on dedicated hosted private infrastructure or shared infrastructure. This excludes software as a service expenditure directly but includes revenue generated from the infrastructure services being consumed to host and operate them.