Synergy Research Group estimated that six cloud services and infrastructure market segments generated a combined $148 billion in operator and vendor revenues over the four quarters ending September 2016—Q4 2015 through Q3 2016. The measured market grew 25% on an annualized basis. This was not one company’s revenue, nor a strictly calendar-year total.
What Synergy’s $148 billion figure measures
The headline comes from Synergy Research Group’s January 3, 2017 review, which describes revenues across six key cloud services and infrastructure market segments for the four quarters ending September 2016. It combines operator and vendor revenues; it is not a revenue figure for Amazon, Microsoft, or any other single provider. Synergy’s review reports 25% annualized growth for that measured market.
The release does not enumerate all six segments in the text available here. It also discusses infrastructure investments that support cloud infrastructure services, enterprise SaaS, and internet services such as search, social networking, email, and e-commerce. Those supporting internet services should not be added to the $148 billion total without the report’s full market definitions.
Which cloud service segments grew fastest?
Synergy reported these growth rates for distinct service segments:
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| Segment | Reported growth |
|---|---|
| IaaS and PaaS services | 53% |
| Hosted private cloud infrastructure services | 35% |
| Enterprise SaaS | 34% |
These are segment growth rates in Synergy’s analysis, not growth rates for particular companies. The figures show why treating “cloud” as a single service category can obscure substantial differences between infrastructure services, hosted private cloud, and enterprise software.
Services revenue versus infrastructure spending
Synergy said spending on cloud services overtook spending on the hardware and software used to build cloud infrastructure in 2016. These are different measures: the first refers to spending on services, while the second concerns the equipment and software investments behind cloud infrastructure.
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For Q4 2015 through Q3 2016, Synergy put spending on cloud infrastructure hardware and software at more than $65 billion. Private-cloud spending accounted for more than half of that total, while public-cloud spending was growing faster. The comparison signals a shift toward services, but it does not mean that services revenue and infrastructure spending are interchangeable accounting totals.
Which companies featured prominently?
Synergy named Amazon/AWS, Microsoft, HPE, Cisco, IBM, Salesforce, and Dell EMC among the companies most prominent across 2016 segment leaders. The review passage does not provide a complete vendor-by-vendor revenue table or establish an overall ranking, so the names should not be read as an ordered list.
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How to read the historical result
The $148 billion estimate is a snapshot of a defined four-quarter period ending September 2016, not a current cloud-market estimate or a calendar-year 2016 total. Its central finding is that measured cloud services and infrastructure segments were growing quickly, with reported growth varying by category and service spending surpassing spending on the infrastructure used to build cloud systems.
Synergy Research Group founder and Chief Analyst Jeremy Duke described the moment this way: “We tagged 2015 as the year when cloud became mainstream and I’d say that 2016 is the year that cloud started to dominate many IT market segments.”
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