Infrastructure as a Service (IaaS), which is sold by public clouds, is gaining enormous popularity and is forecasted to become a US$43.6 billion market by 2020. This finding is from abacus-rattling firm IDC’s new Worldwide Public Cloud Infrastructure as a Service Forecast, 2016-2020.

The IDC research director of public cloud storage and infrastructure, Deepak Mohan said, “Public cloud services are increasingly being seen as an enabler of business agility and speed. This is bringing about a shift in IT infrastructure spending, with implications for the incumbent leaders in enterprise infrastructure technologies. The growth of public cloud IaaS has also created new service opportunities around adoption and usage of public cloud resources. With changes in the infrastructure, architectural, and operational layers, public cloud IaaS is slowly transforming the enterprise IT value chain.”

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The revenue was already $12.6 billion in 2015 and if it has to reach the staggering figure of US$43.6 billion as forecasted, it has to show a compound annual growth rate of 28.2% year on year. In 2015 alone, the market grew by 51%, but this growth rate cannot be maintained and the growth is expected to slow after 2017. As of now, the enterprise acceptance and adoption rates are driving strong growth figures, but by the end of 2016, nearly two-thirds of the respondents will either be already using or planning to use public cloud IaaS. 

Once a larger chunk of the population will already be using the service, the enterprises will get over the hump and move towards cloud optimisation rather than exploration. Though this news of growth is good for cloud companies, it is bad for hardware companies that provide on-premises infrastructure as the on-premises pie is shrinking. 

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But there’s a silver lining for these companies as IDC also predicts – “For many enterprises, a hybrid infrastructure mixing existing IT infrastructure with cloud infrastructure represents the optimal path to public cloud IaaS adoption. In fact, hybrid cloud infrastructure is already a common pattern at several large enterprises and IDC predicts that 80% of IT organisations will be committed to hybrid architectures by 2018.”

The report takes a narrow scope, focusing on pure IaaS and looking at seven big players. So far, Amazon Web Services is leading the pack with 70% market share.