Spending for cloud services has skyrocketed in 2020

The cloud market belongs clearly to the three biggest hyperscalers. Collectively, these three cloud vendors earned 58% of the industry revenue (in 2020).

According to Canalys, Cloud spending was up by 33% in 2020 (+$35 billion). While the industry was growing already before the pandemic, the novel coronavirus clearly impacted those numbers. Cloud spending was driven primarily by the demand for the cloud to support remote working and collaboration, online gaming, music streaming, or the thriving e-commerce industry. 

With its 31% market share, AWS is still the most significant provider, but others are catching up. Microsoft's cloud business (20% market share) could be worth more than $70 billion in 2021 - and that's only the cloud, not the whole company. That's the equivalent of a Fortune Global 50 company.

Among the hyperscalers, Google reported the most considerable growth. For the full year of 2020, the revenue was $13 billion. Yet, it came at a high cost - Goole reported $5.6 billion in operating losses in its quest to catch up with the others. 

But it's not only the pandemic that had a noticeable impact on this growth. Another wave of digital transformation projects is on its way and will affect nearly every company and every industry.

In 2020 many transformation projects were postponed but are now reprioritized. Companies reevaluate whether more applications can be moved to the cloud and modernized. The "lift and shift" approach - so prominent - was considered low-risk, but to harness the cloud's full potential, businesses need to use more cloud-native functionalities like serverless and other PaaS services. And that means more revenue for the cloud providers.

(On a side note, we have seen many companies that were disappointed by the ROI of the cloud. This is especially true for those who used the "lift and shift" approach with no or slight modifications. But the real benefits come only with the more advanced cloud technologies)

Financial services, healthcare, and pharmaceuticals are among the industries leading the way. Even those who rarely thought about moving their applications to the cloud are under pressure to invest more now.