- Gartner forecasts an acceleration of growth in 2025 with a 21.4% increase
- Cloud Application services will account for about $300 billion worth of business
- In contrast, desktop-as-a-service, once a promising growth area, will barely reach $4 billion
New research has claimed spending on cloud services is set to reach a new high as the demand for AI continues to grow.
A report from Gartner predicts worldwide end-user spending on public cloud services will reach $723.420 billion in 2025, a growth rate of 21.4%, an increase from $595.652 billion in 2024, highlighting the growing reliance on cloud services across industries.
Cloud Application Services (SaaS) remains a key segment, with spending now forecast to grow from $250.8 billion in 2024 to $299.1 billion in 2025. Similarly, Cloud System Infrastructure Services (IaaS) spending is expected to reach $211.9 billion by 2025, while Platform-as-a-Service (PaaS) will rise to $208.6 billion. In contrast, desktop-as-a-service (DaaS), once seen as a promising growth area, is now predicted to contribute just $3.85 billion to the 2025 total, reflecting its limited adoption and marginal share in the cloud market.
Predicting cloud infrastructure spending is tricky
In analyzing the market dynamics and noting the fractional change in the monthly cloud spending figures, The Next Platform noted, “The market for cloud infrastructure is now so large that it is very difficult for it to change drastically. But given the fact that people can turn off server, storage, and networking capacity as easily as they can turn it on, predicting how much money the world will spend on cloudy infrastructure can be tricky.”
TNP also observed a trend where “more than two-thirds and heading towards three-quarters of raw infrastructure and platform services are sold together,” now referred to as Cloud Infrastructure and Platform Services (CIPS). In 2022, CIPS represented 70% of total IaaS and PaaS revenues, and this share is expected to grow to 71.6% by 2025. The Next Platform concluded, “In the long run, this is what ‘cloud’ will mean… You not only pick its preferences for servers and storage and networks, but you pick its platform.”
The figures show an increase from a seperate November 2024 Gartner report which said spending on public cloud services would reach $723.421 billion, with Sid Nag, Vice President Analyst at Gartner, noting at the time, “The use of AI technologies in IT and business operations is unabatedly accelerating the role of cloud computing in supporting business operations and outcomes. Cloud use cases continue to expand with increasing focus on distributed, hybrid, cloud-native, and multicloud environments supported by a cross-cloud framework.”
Hybrid cloud environments are expected to become the norm in the next couple of years, with Gartner forecasting that 90% of organizations will adopt this approach by 2027.
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