'Big six' hyperscalers deepen Aussie dominance as demand surges

'Big six' hyperscalers deepen Aussie dominance as demand surges

AWS, Azure, Google, IBM, Oracle and Alibaba Cloud claimed a combined $1.16 billion in IaaS revenue in Australia last year.

Credit: Dreamstime

Amazon Web Services (AWS), Microsoft Azure, Google Cloud, IBM, Oracle and Alibaba Cloud have seen their combined dominance in the Australian market grow, with the ‘big six’ hyperscale cloud providers increasing their local market share to 85 per cent last year.

This is according to industry analyst firm Telsyte, which has released new figures illustrating the continued growth of Australia’s infrastructure-as-a-service (IaaS) market, with cloud driving digital transformation and new product development.

According to Telsyte, Australian organisations spent $1.36 billion on IaaS in 2020, up 38 per cent from the $988 million spent in 2019.  

The analyst firm forecasts the total market to reach $1.74 billion this year, equating to a year-on-year increase of 28 per cent, with more than half of businesses that have already adopted cloud planning to increase their cloud spending in 2021.

Moreover, the market is on track to exceed $3 billion by 2025.

Together, the big six global hyperscale clouds – AWS, Azure, Google, IBM, Oracle and Alibaba Cloud – continued to dominate the Australian cloud market, claiming a combined $1.16 billion in IaaS revenue in 2020, or 85 per cent of the market, up from 82 per cent the year prior.

Telsyte reckons that hyperscale IaaS will capture nearly 90 per cent of revenue in Australia by 2025.

“The hyperscaler public clouds are consolidating their dominance in market by offering more complex services, such as machine learning, automation as well as a growing list of other services,” said Telsyte managing director Foad Fadaghi.

As has already been widely established, Telsyte pointed out that the IaaS market has been fuelled by pandemic-driven digital transformations, with more than 30 per cent of Australian business leaders claiming COVID-19 as a driver for digital transformation strategies.

Almost half of the local market’s business leaders now have a ‘cloud first’ policy, according to Telsyte’s latest research.  

The continuing cloud surge comes at a time when public cloud is now mainstream among Australian businesses, Telsyte said.  

But the public cloud market hasn’t been tapped out yet, with the analyst firm suggesting that 39 per cent of organisations are in the development phase when it comes to public cloud, investigating and developing cloud services as cloud and hosted models replace on-premises applications.

With pure cloud and managed service provider (MSP) delivery models now making up 55 per cent of application workloads, according to Telsyte’s research, the majority of those using cloud have opted for hyperscalers’ cloud solutions, which are typically the most visible starting point.

Against this backdrop, Telsyte’s research found that local businesses on average have 3.3 public cloud services and 3.8 private cloud services in use, with multi-cloud use rising with the size of organisation.

This is slightly down from four in 2020, but cloud ‘sprawl’ is still an issue and hybrid platforms need to have consistent management across infrastructure, the firm noted.  

Meanwhile, hybrid cloud use is high, with 65 per cent of organisations claiming they invest in it, as they shuffle a mix of workloads, and going forward, hybrid cloud use and intentions are very high as CIOs select the most appropriate hosting architecture.

Despite the continued growth and uptake, challenges remain, particularly cloud utilisation.

The average utilisation rate is only 31 per cent, according to Telsyte. However, this factor creates opportunities for cloud providers and managed services to assist organisations to better-utilise resources.

The top three cloud priorities right now for local businesses include developing new cloud products, migrating more workload to cloud and implementing more security measures on cloud. 

In July, fellow industry analyst firm IDC revealed that spending on certain products in the global cloud infrastructure market increased by 12.5 per cent, year-on-year, during the first quarter of 2021, with the market shifting towards shared cloud infrastructure all but guaranteed.

IDC’s Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment report suggested that spending on shared cloud infrastructure rose by 11.6 per cent year-on-year during Q1, to US$10.3 billion. Meanwhile, non-cloud infrastructure spending rose by just 6.3 per cent to US$ 13.5 billion. 

As a result, IDC expected shared cloud infrastructure spending to surpass non-cloud infrastructure spending “in the near future”. 

Meanwhile, spending on dedicated cloud infrastructure rose by 14.7 per cent during the quarter, to US$4.8 billion, with 45.5 per cent of this deployed on customer premises.

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