Global cloud services spend up 33%, to hit $62.3 bn in Q2 2022

As cloud infrastructure services continue to be in great demand, the spending in the segment has increased 33 per cent year-on-year to $62.3 billion. The expenditure was over $6 billion more than in the previous quarter, and $15 billion more than in Q2 2021, as per the research firm Canalys.

Of the total market, the top three vendors, namely Amazon Web Services (AWS), Microsoft Azure and Google Cloud accounted for 63 per cent global spendings in Q2 2022, and collectively grew 42 per cent. AWS accounted for 31 per cent of total cloud infrastructure services spend in Q2 2022, and grew 33 per cent on an annual basis. Azure was the second largest cloud service provider in Q2, with a 24 per cent market share after growing 40 per cent annually. Google Cloud grew 45 per cent in the latest quarter and accounted for an 8 per cent market share.

“Cloud remains the strong growth segment in tech,” said Canalys VP Alex Smith. “While opportunities abound for providers large and small, the interesting battle remains right at the top between AWS and Microsoft. The race to invest in infrastructure to keep pace with demand will be intense and test the nerves of the companies’ CFOs as both inflation and rising interest rates create cost headwinds,” Smith added.

Both AWS and Microsoft are aggressively rolling out infrastructure. For instance, AWS has plans to launch 24 availability zones across eight regions, while Microsoft plans to launch 10 new regions over the next year. In both cases, the providers are increasing investment outside of the US as they look to capture global demand and ensure they can provide low-latency and high data sovereignty solutions.

“Microsoft announced it would extend the depreciable useful life of its server and network equipment from four to six years, citing efficiency improvements in how it is using technology,” said Smith.

“This will improve operating income and suggests that Microsoft will sweat its assets more, which helps investment cycles as the scale of its infrastructure continues to soar. The question will be whether customers feel any negative impact in terms of user experience in the future, as some services will inevitably run-on legacy equipment,” he added.  

The cloud service growth was driven by a range of factors, including demand for data analytics and machine learning, data center consolidation, application migration, cloud-native development and service delivery. Even the growing use of industry-specific cloud applications also contributed to the broader horizontal use cases seen across IT transformation.