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Cloud-based AI Market Poised for Ten-fold Growth

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Posted March 28, 2018

Artificial Intelligence (AI) is likely to play a major role in the ongoing transformation of the cloud computing market at the global level, says Bernie Trudel, Chairman of the Asia Cloud Computing Association (ACCA).

Trudel, in his address at the recent Cloud Expo Asia conference in Singapore, spoke about the cloud computing industry trends. He opined that the cloud-based AI market will see a year-on-year growth rate of over 50 percent, thus increasing its share in the global cloud computing market from the present 1 percent to 10 percent by 2025.

Forecasts

IDC, the premier market intelligence firm, projects a rapid rise for the AI software platforms.

“IDC forecasts the overall cognitive/AI software platforms market to grow significantly through 2021, exceeding USD 8 billion in revenue at a CAGR exceeding 39 percent,” says David Schubmehl, Research Director at IDC.

Frank Jens, the IDC Chief Analyst, averred that the major Third Platform technologies such as Big Data Analytics, Internet of Things (IoT), and cognitive/AI technologies are heavily dependent on the cloud as a foundation.

“Customers are shifting to a ‘cloud first’ strategy for updating/replacing traditional systems and to ‘cloud only’ when developing their next-generation competitive advantage systems and services,” adds Frank.

One of the reasons for the rapid proliferation of cloud infrastructure services has been the growth of the lucrative Infrastructure-as-a-Service (IaaS) market. The need for deployment of enterprise-level computing capabilities, along with minimizing IT infrastructure management costs and thereby the overall IT burden, is prompting an increasing number of Small and Midsize Businesses (SMBs) to consider using IaaS. Faster implementation along with flexibility, scalability and agility provided by the service are some of the factors influencing the IaaS market growth.

Drivers Behind the High Spending on IaaS
Organizations are increasingly turning to the adoption of the hybrid cloud on account of the high costs associated with the private cloud model and the limitations to data security in the public cloud. Consequently, the adoption of IaaS solutions has also seen a positive trend. Organizations are also upping their IaaS spending owing to the technology advancements, increasing digitalization and the growing demand for storage, disaster recovery and virtualization.

Region-wise Market Share

The global IaaS market is forecast to reach USD 56.05 billion by 2020 at a CAGR of 29 percent, with the largest market share retained by North America. The Asia-Pacific (APAC) market is expected to see the highest annual growth rate of 35.8 percent by virtue of the rapidly-rising technology adoption in Australia, India and China.

The Middle East market, which presently stands at USD 2.66 billion, is expected to see a three-fold rise to reach a market size of USD 8.79 billion in the next five years. While Qatar will be at the forefront in market adoption, other countries such as Bahrain, Egypt, Iran, Israel, Kuwait, Oman and Turkey are expected to expand their market reach rapidly buoyed by the growth of cloud and analytics, IoT, Bring Your Own Device (BYOD) and other cloud-dependent technologies.

In Conclusion

A majority of the early adopters of the AI technology consider it to be of great significance to success as well as in the formulation of their overall organizational strategies. Nine in ten of the early adopters are also cognizant of the role of cloud services in AI initiatives, using Software as a Service (SaaS) and Platform as a Service (PaaS) for the development and delivery of AI solutions.

As the technologies rapidly evolve, AI and cloud will not just be indispensable but also mutually interdependent, with the development of cloud technology having a direct bearing on the developments in AI capabilities.

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