Cloud-based companies are making it rain for shareholders, and revenues are only expected to climb over the next four years. According to projections made by both Salesforce and SAP at investor-day events they held last month, it’s estimated their combined cloud income will pass $51 billion by the end of the 2023 calendar year.
Over the next four years, Salesforce expects its market share to surge up to $35 billion while SAP sets its sights on an estimated $16.5 billion in cloud income. Cloud Wars’ Bob Ellis estimates that mixing in some of the other major cloud vendors – such as Workday, Oracle, and ServiceNow – will bring the total of SaaS/PaaS revenues to a staggering $84 billion by 2023.
Ellis also points to gains being made outside of SaaS/PaaS by companies like Amazon, whose AWS business unit is predicted to generate $60 billion in revenue by 2023. Google Cloud doesn't separate out revenue figures, but Ellis has made an educated guess of $15 billion in SaaS/PaaS revenue by 2023. IBM could surge up to $43 billion if it can maintain a 20 percent growth rate over the next few years.
Secular tailwinds like accelerated digital transformation and burgeoning multi-cloud market has meant big things for cloud computing companies. Increasing demand for streamlined, scalable services that integrate well has gotten tech firms to put aside their competitive differences in service of creating applications that play well together. Market leader Microsoft has embraced the many forms of cloud that customers have chosen to take and have projected a $50 billion in revenue for fiscal year ending June 30, 2020.
Salesforce CEO Marc Benioff is supremely confident he can stay ahead of the competition like Oracle and SAP. He projects his San Francisco-based business will reach $20 billion in revenue in 2020 and points to their customer-centric content philosophy, their industry-specific cloud offerings, and their active merger & acquisition philosophy to drive revenue growth in the upcoming years.
Gartner expects the worldwide public cloud services market to grow an overall 17 percent in 2020 to $266.4 billion, an increase from the 2019’s $227.8 billion. They forecast that SaaS will be the fastest-growing segment of the market – expected to reach $116 billion due to the scalability of subscription-based software. The second fastest-growing segment is believed to be cloud system infrastructure services or IaaS (infrastructure-as-a-service), which is expected to reach $50 billion in 2020. It’s also thought to be the highest growing segment within the market – predicted to increase by 24 percent year-over-year.
"The cloud-managed service landscape is becoming increasingly sophisticated and competitive. In fact, by 2022, up to 60 percent of organizations will use an external service provider's cloud-managed service offering, which is double the percentage of organizations from 2018," said Sig Nag, research vice president at Gartner. "Cloud-native capabilities, application services, multi-cloud and hybrid-cloud comprise a diverse cloud ecosystem that will be important differentiators for technology product managers. Demand for strategic cloud service outcomes signals an organizational shift towards digital business outcomes.”