Consumption of Cloud Infrastructure Services Grew at the Slowest Rate in 3Q 2022

Expenditure on cloud infrastructure services increased by 28 per cent year-on-year globally during the third quarter to reach USD 63.1 billion, the first time the rate has fallen below 30 per cent, the technology analyst firm Canalys reports.

FREMONT, CA: High energy prices, high inflation, and a strong US dollar were blamed for the slow growth rate, and businesses responded to the uncertainty by reducing expenditure. This can have an impact on the short-term demand for cloud services.

The top three suppliers were Amazon Web Services (NASDAQ: AMZN), Microsoft Azure (NASDAQ: MSFT), and Google Cloud (NASDAQ: GOOGL), which together accounted for 63 per cent of the total expenditure, an increase of 33 per cent in their share. Google received nine per cent, AWS 32 per cent, and Azure 22 per cent. Enterprise customers avoid operational risks by cutting their IT budgets under economic pressure.

The expansion of cloud suppliers will be restricted because of unavoidable project delays as some customers become uneasy about the economy, despite having won significant deals and a backlog of contracts to complete. In 2023, hyperscalers will likely plan more conservatively due to growing expenses and slower revenue growth. Hyperscalers will have to raise their pricing in Europe by 30 per cent to reflect the rising cost of electricity.

Hyperscalers are continuing to put out new infrastructure to reach new clients globally, said research analyst Yi Zhang. They are simultaneously looking for the newest items and technological advancements that would spur business growth. Thoughts about the value that can be retrieved from data in the cloud have been driven by the rising popularity of cloud services. Google and Microsoft highlighted the products they build around data and AI. Introducing data and AI is anticipated to create value for the cloud service market.

Cloud infrastructure services offer platform-as-a-service and infrastructure-as-a-service, whether on shared public infrastructure or hosted privately. This doesn't include direct spending on software as a service, but it includes revenue from the infrastructure services used to host and run them.