Q2 2017 results reveal cloud infrastructure growth of 47%

By:
Natalie Bannerman
Published on:

Figures from the latest Q2 2017 results, show that the cloud infrastructure market grew by 47%, with the future looking to AI for next wave of growth

According to Q2 2017 results, the cloud infrastructure market grew by 47% YoY, reaching a total of $14 billion.

Overall the top four cloud service providers represented 55% of the entire cloud infrastructure services market, according to analysis by Canalys. 

In order these are: Amazon Web Services (AWS) at the top, growing 42% YoY and accounting for 30% of the total spend, although it grew at slower rate than two of its competitors. Second came Microsoft with 97% growth; third was Google with a 92% growth rate, and lastly IBM which grew at a rate of 23%, the only one of AWS’s rivals to be beaten in terms of growth.


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Demand for primary cloud infrastructure services, such as on-demand computing and storage, are the main drivers for this growth, said Canalys. But future growth will be fuelled by the AI platforms that cloud service providers are building to develop new applications, processes, services and user experiences.

AWS for example has established an AI service that focuses on understanding language, speech recognition, visual search, text-to-speech conversion and machine learning technologies. “It continues to strengthen its AI capabilities, with increased accuracy in speech recognition, as well as offering Volta GPU-powered virtual instances in its EC2 to expand its deep-learning capabilities,” said Daniel Liu, research analyst at Canalys. 

Meanwhile, “Microsoft is focusing more on machine reading, which will enable automatic understanding of text. It acquired Maluuba, a deep-learning start-up, in January this year as it sees AI as a strategic part of the company’s future growth,” added Liu.

Google has also announced its own AI chip called the Cloud TPU, which is used to run Google’s AI services. Although the chip won’t be sold, exclusive access through a dedicated cloud service will be available and is set to launch at the end of this year. “AI is still in an early stage of development and not delivering significant revenue yet, but it offers tremendous potential, with demand for AI-related workloads expected to fuel cloud services growth,” said Liu. 

Watson is the AI that IBM is backing to drive future growth for the company, with application programming interfaces (APIs) like conversation, discovery and visual recognition, it is already being used in security intelligence and contact centres.

“Leading chipset providers also gained traction, with Nvidia’s datacenter GPU business growing nearly 300%. AMD’s partnerships with Microsoft, Google and Baidu to provide graphics processors for their AI businesses signifies cloud service providers’ growing investment in hyper-scale hardware with AI-focused capabilities. This investment will continue to drive customer spend on cloud services,” said Liu. 

The latest figures align with forecast data, recently released by Synergy Research Group indicating that cloud and SaaS global revenue will pass the $200 billion milestone in 2020.