Gartner looks into its public cloud crystal ball

Things are looking rosy for the public cloud from where IT research giant Gartner sits. Others, however, see the private cloud doing just fine.

Gartner expects the worldwide public cloud service market to grow 18% in 2017 to total $246.8 billion. That’s up from $209.2 billion in 2016.

  • IaaS is expected to grow 36.8% in 2017 to reach $34.6 billion.
  • Software as a service (SaaS) is expected to grow 20.1% to reach $46.3 billion

That said, Gartner expects the public cloud’s growth delta to start declining.

Sid Nag, Gartner research director, said “The overall global public cloud market is entering a period of stabilization, with its growth rate peaking at 18% in 2017 and then tapering off over the next few years.”

Most of this will be driven by cost savings.

Nag continued, “While some organizations are still figuring out where cloud actually fits in their overall IT strategy, an effort to cost optimize and bring forth the path to transformation holds strong promise and results for IT outsourcing buyers.” Gartner predicts that through 2020, cloud adoption will influence over 50% of IT outsourcing deals

Other factors are also playing a role. Nag stated, “Organizations are pursuing strategies because of … values such as agility, scalability, cost benefits, innovation and business growth.” So, “While all external-sourcing decisions will not result in a virtually automatic move to the cloud, buyers are looking to the ‘cloud first’ in their decisions, in support of time-to-value impact via speed of implementation.”

While SaaS won’t be growing as fast as IaaS, it will be driven forward by businesses switching from internal applications for things like human resources, customer relationship management (CRM) and financial operations.

The result of all this? Nag estimates “that more than 50% of new 2017 large-enterprise North American application adoptions will be composed of SaaS or other forms of cloud-based solutions. Mid-market and small enterprises are even further along the adoption curve. By 2019, more than 30% of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only.”

Other analysis firms, including Wikibon, see private clouds, such as those based on OpenStack, declining in the face of public cloud growth. Co-founder John Furrier recently wrote, “Wikibon believes that the leading [OpenStack] vendors are currently at or below a $100M/yr run-rate for OpenStack-related business (hardware, software, services).”

OpenStack begs to disagree. In a recent interview, OpenStack COO Mark Collier told me, “Businesses are finding that the public cloud isn’t as affordable as they thought it would be. They’re discovering that an OpenStack-based private cloud can give them more control over their finances.”

Of course you might think, what else would an OpenStack representative say? But he’s not the only one who doesn’t think public cloud will run roughshod over the private cloud.

Ellen Rubin, CEO of ClearSky Data, a hybrid cloud company, said, “While AWS, Azure and Google seem to be the buzzwords of the year, most enterprises are still hesitant to make the leap.”

In my crystal ball, I see the public cloud growing. That said, I’m sure the private cloud is far, far from death.

True, “You can’t beat public cloud for immediacy. It’s spins up faster,” as Canonical and Ubuntu founder Mark Shuttleworth told me in a recent interview. “But, the economics of private cloud on a three-year timeframe still make sense so long as you automate your private cloud with DevOps tools such as Kubernetes, Docker Swarm, and Juju.”


2017 will be a cloud buyer’s market as providers simplify and add capabilities

Where is the cloud workplace on the technology adoption life cycle?

What’s ahead for security and cloud adoption?



  1. Can you share those private cloud economics numbers that Shuttleworth refers to? I’m somewhat skeptical that the gap between public and private cloud, identified by James Hamilton a number of years back, has shrunk from the 86% cost advantage to AWS for hardware to anywhere near zero.


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