Market Forecasts For The Cloud Computing Industry In 2016

Andy Parker
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Market Forecasts For The Cloud Computing Industry In 2016

Cloud computing is one of the fastest growing industries on the tech scene and companies offering cloud solutions have continued to register more revenue growth.

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Amazon.com, Inc. (NASDAQ:AMZN) reported that it registered revenues of $7.88 billion from Amazon Web Services in the fourth quarter of 2015. Analysts estimate that the cloud services industry will grow at a Compound annual growth rate of 19.4% in 2016. The industry managed to achieve $70 billion in revenue and analysts expect revenues to grow past $141 billion by 2019.

Estimates from Morgan Stanley (NYSE:MS) suggest that Microsoft Corporation (NASDAQ:MSFT) will get about 30% of revenues since 2008 from its Microsoft Clouds Products. These are just some of the few estimates that have been provided by research consultancies including Gartner Inc (NYSE:IT) and International Datacasting Corporation (TSE:IDC) and others. Amazon has also been a significant contributor not only because of the performance of AWS, but also because of its decision to report AWS revenues separately. The platform has in turn become a vital benchmark for monitoring growth in the cloud industry.

Amazon’s operating margin for the fourth quarter of 2015 was 28.5%. AWS also achieved a segment operating income of $1.863 billion. Analysts also expect firms to invest about $38 billion in public cloud infrastructure this year. The spending will be focused on both hardware and software aspects of the industry. They also expect the spending to reach $173 billion in the next ten years.

More cloud service companies are expected to crop up as the industry continues to grow while the already existing firms will also benefit as more individuals and corporations adopt to the shifting trend. This is because cloud computing offers a lot of advantages including cost savings, thus adding more value to businesses. As for the new startup cloud firms, it will depend on the type of needs that they plan to address. Overall, the whole industry is expected to improve as technology advances.