Canalys: Global Cloud Services Market Growth Slows

Worldwide cloud infrastructure services spending increased 16% to US$72.4 billion in Q2 2023, according to market research from Canalys. However, this growth rate represents a decline against the previous quarter’s 19%, as the market feels the effect of spending pressures, as well as the impact of the market’s greater size. In Q2 2023, the top three vendors, AWS, Microsoft Azure, and Google Cloud, collectively grew 20% – down from 22% in Q1 – to account for 65% of total spending. While AWS and Microsoft both saw a deceleration in growth, Google Cloud’s growth rate remained stable compared with the previous quarter, at 31%.

In the current business landscape, where emphasis is placed on cost control, cloud vendors must secure a significant influx of new customers and workloads to drive revenue growth, according to Canalys. The emergence of AI technology is introducing new cloud workloads and is set to fuel massive demand for computing capacity, creating new opportunities for cloud growth. Notably in this quarter, both AWS and Microsoft launched new AI-oriented partner programs, recognizing the importance of collaborating with partners to drive customers’ use of their AI products.

“The most common collaboration model involves partners contributing their industry expertise, business process knowledge and data analytics experience within relationships,” said Yi Zhang, Research Analyst at Canalys. “Cloud providers, in turn, offer partners early exposure to their emerging technologies and provide technical support.”

Amazon Web Services (AWS) continued to lead the cloud infrastructure services market in Q2 2023, accounting for 30% of total spend, an increase of 12% year on year. Microsoft Azure accounted for 26% of the market after growing 26% annually, positioning it as the second-largest cloud service provider in Q2 2023. Google Cloud grew 31% year on year in Q2 2023, the strongest growth of the top three hyperscalers, to capture 9% of the cloud market.

Channel Impact^®
The focus in this space is shifting toward partners that are building service practices around AI, engaging in sales and marketing initiatives that focus on AI, producing original thought leadership and compelling case studies around AI applications, and selling solutions that are embedded with AI capabilities.