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Global cloud market grows 33% in Q3 2020 to $36.5 billion

The COVID-19 pandemic has affected almost every industry in some way or another. In most cases, the effect has been negative, but several sectors have benefited from the new remote working and learning norms — not least of which is cloud computing.

The increased dependence on this industry has resulted in a surge in revenues, and the worldwide cloud market grew 33% in Q3 2020 to US$36.5 billion, which was US$2.0 billion higher than the previous quarter and up US$9.0 billion year-on-year, according to Canalys data.

A new surge of COVID-19 cases in the United States and Europe will continue this trend as social distancing measures are put back in place, meaning cloud will remain vital for sustaining business operations, remote working and learning, as well as customer engagement.

The report found that Amazon Web Services (AWS) was the leading cloud service provider in Q3 2020, increasing its share of total spend from last quarter to 32%.

AWS grew its business by US$2.6 billion year-on-year, generating more revenue than the next three largest cloud service providers combined.

Meanwhile, Microsoft saw its Azure business expand significantly from last year, growing 48% on an annual basis to reach a 19% market share — up from a 17% share in Q3 2019. It also reported an increase in long-term contracts, highlighting growing commitment among its larger customers as they migrate mission-critical workloads to Azure.

At 7% market share, Google Cloud also maintained its momentum, particularly around its six targeted industries. The company accelerated its enterprise business and is increasingly focusing on raising its channel involvement in deals as well as partner enablement.

Alibaba Cloud clinched 6% worldwide market share and continued to lead the Chinese market, where cloud computing is a vital part of the government's development plans. The company is also the overall leader in the Asia Pacific region.

Canalys chief analyst Matthew Ball says many organisations have learned lessons from the first wave of pandemic-related lockdowns, and have subsequently prioritised the need to increase business resilience and agility.

“Increased consumption has driven cloud infrastructure services spend this year, though some larger and more complex deals were delayed due to uncertainty caused by the pandemic,” says Ball.

“But as organisations adjust to the new normal, these longer-term projects are accelerating again.

“Some organisations are taking a cost-driven approach by reducing capital expenditure on their own data centers and cutting management costs from outsourcing contracts. Others are taking a transformational approach, developing new cloud-native applications and business models.

“But they will all have to be more measured and cost-conscious, requiring greater control and visibility of spend, while also deciding not to migrate every workload.

Multi-cloud and hybrid IT will continue to gain momentum as organisations assess the optimal deployment and operating model for each workload, based on cost and performance, according to Canalys.

This will include mobile edge incorporating 5G for existing and new applications requiring ultra-low latency, like autonomous vehicles, industrial robotics, and augmented and virtual reality solutions.

“The convergence of cloud and 5G at the mobile edge will form the next wave of growth for the leading cloud service providers,” says Canalys research analyst Blake Murray.

“It also represents a new front for infrastructure buildout and competition between AWS with Wavelength, Microsoft Azure with Edge Zones, and Google Cloud with Mobile Edge Cloud.

“All three are collaborating with mobile operators to deploy their cloud stacks at the edge in the operators' data centers.

“These are part of holistic initiatives to profit from 5G services among business customers, as well as transform the mobile operators' IT infrastructure.

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