LONDON January 14, 2021 - According to Omdia’s Cloud & Colocation Services for IT Infrastructure and Applications Tracker, in 2019 hyperscalers represented 35% of all off-premises cloud service revenue in 2019, rising 11 percentage points from 2016. Tier 2 cloud service providers represented 50% of all off-premises cloud service revenue in 2019, declining 8 percentage points from 2016. Telcos represented 15% of all off-premises cloud service revenue in 2019, down by 3 percentage points from 2016.

Tier 2 cloud service providers represented 50% of all off-premises cloud service revenue in 2019, declining 8 percentage points from 2016. Telcos represented 15% of all off-premises cloud service revenue in 2019, down by 3 percentage points from 2016.

 

Exhibit 1: Off-premises cloud service revenue by market segment

Over the last few years some telco providers have de-focused on building large centralized cloud data centers and others have exited the cloud services market entirely. At same time, numerous Tier 2 providers began entering the cloud services market, offering specialized data and application services. Omdia expects revenue for the overall cloud services market to grow 29% year-over-year from 2019 to 2020 and have a five-year compound average growth rate (CAGR) of 16% from 2019 to 2024; hyperscale cloud providers will undoubtedly lead the charge in terms of revenue growth over this time.

 

Hyperscale cloud service providers and telcos join forces and make a pledge at the edge

Major cloud service providers (CSPs) and telecom companies, including Amazon Web Services (AWS), Microsoft Azure, Google Cloud, IBM, AT&T, Telefónica, Orange, and Verizon established strategic partnerships to address growing customer needs at the edge.

• AWS and Verizon collaborated to provide 5G mobile edge computing (MEC) in locations across the U.S.

• Google Cloud partnered with Telefónica to offer MEC in Spain.

• Google Cloud and Orange cooperated on cloud, edge computing, and cybersecurity services in Europe.

• IBM Cloud worked with AT&T to enable the management of applications in hybrid cloud environments.

• Microsoft took Azure to the stars with its release of Azure Space services.

 

Exhibit 2: Omdia's edge located data centers defined

Omdia defines ‘the edge’ as locations with maximum 20 milliseconds (ms) roundtrip time (RTT) to the end-user device, or machine. In Omdia’s Cloud & Colocation Services for IT Infrastructure and Applications Tracker roadmap the period from 2023 and beyond is defined as the edge evolution phase, during this time all hyperscalers, plus most telcos and tier 2 cloud service providers, will accelerate their release of edge services as customer spend on cloud services grows. Also, during this timeframe developers will increase their creation of open-source apps designed for use at edge-located data centers. From 2023 and onward, rising adoption of multi-cloud and edge computing services will drive stronger partnerships between cloud, telco, and colocation service providers, even stronger than the ones established thus far.

“You can’t attend a conference today, virtual or physical, without being overloaded with comments about the edge and how it will be a game changer. In those same discussions the status quo top 4 hyperscale service providers are the main companies mentioned, yet if edge services make the evolutionary market impact many people expect it to then all cloud providers- large and small, will be able to capitalize on its services not just the big guys." says Devan Adams, principle analyst at Omdia. 

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