Public Cloud X Growth Accelerates Further | Cowen

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THE COWEN INSIGHT

Our 10th annual report on the Public Cloud market, based on a survey of 653 US respondents, suggests Public Cloud spend growth of +41% y/y in ’22, accelerating vs. ’19-’21 levels. Our survey also provides insights on other key trends, including workload migration, multi-cloud, & lengthening contracts, among other topics.

WHAT IS NEW IN OUR 10TH ANNUAL CLOUD SURVEY

Our 10th Annual Cloud Survey provides an updated view of public cloud spending trends, workload migration dynamics, and vendor positioning based on a survey of US IT and cloud services buyers. Our survey also addresses several new topics:

• Custom silicon
• Public Cloud contract length
• Cloud automation
• The potential of COVID-19 to impact long-term cloud investment

We surveyed 653 respondents comprising ~$6.8BN in IT spend; the sample was split evenly among SMB, Mid-size, and Enterprise customers.

PUBLIC CLOUD GROWTH, ADOPTION & DEPLOYMENT

We expect continued fast-paced public cloud growth, as our survey suggests further workload migrations from on premise will, in part, drive accelerating spend growth from existing customers. We also believe new customer adoption of various cloud services will be another growth lever. While we view the shift to the cloud as still early, there are signs of maturation. This includes customers seeking longer contracts with large cloud platforms. Thereby creating more stability and visibility for cloud vendors. We expect cloud platforms to make further investments in new services, driving a virtuous cycle of new product adoption.

In terms of cloud deployments, ease of cloud installations improved for the third year in a row per our ’19-’22 surveys; meanwhile, security remained a key concern that will likely be addressed over time.

TAKEAWAYS

Global public cloud market revenue of $403BN in ’21 is expected to rise to $976BN in ’26, a ~19% CAGR per Gartner, while Infrastructure as a Service (IaaS) is the fastest growing segment at a 27% CAGR ’21-’26. Here are some key takeaways from our report.

• On average, survey respondents expect their spending with public cloud providers to grow ~41% in ’22, representing a further acceleration from the +39%, +38%, and +36% y/y growth we saw in the 2021, 2020, and 2019 surveys, respectively.
• Overall, we are encouraged by the further step-up in expected growth and believe the survey results are a good directional indicator of the pace of spending within existing cloud customers.