Contradictory outlook for cloud service providers amid COVID-19

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The impact of COVID-19 this year and next could cause off-premises cloud service providers to shift their priorities, according to new research from Omdia.

The coronavirus pandemic is significantly affecting the business world, with impact felt from the data centre compute, storage and networking markets all the way up to the applications running in the cloud, the Omdia Cloud & Colocation Services for IT Infrastructure & Applications Market Tracker notes.

The report finds that the cloud services market is experiencing contradictory effects.

Massive surges

“On one hand, data centre operators are experiencing massive surges in consumer usage of compute resources due to school closures, social distancing and government work-at-home mandates. This is making it increasingly imperative to provide a reliable, scalable and secure cloud,” explained Devan Adams, Principal Analyst at Omdia.

“The new rules for society have created new norms, resulting in increased demand for e-learning, remote working, binge television watching and other at-home activities.”

Negative effects

Adams, continued, “On the other hand, IT infrastructure services – [that is], IaaS, CaaS [containers as a service], PaaS – are experiencing equally negative effects as many small-and-medium businesses (SMBs) either temporarily shut down or prepare to close their doors permanently as they are unable to remain financially viable.”

In the cloud services market, Omdia expects that software as a service (SaaS) revenue will increase by 4 or 5 percentage points in 2020 compared to previous estimates. In 2021, the market will see a two to three point increase.

In 2020, IT infrastructure service revenue is set to decrease by 2 or 3 percentage points versus previous estimates, Omdia says. In 2021, it is expected to see a 1 to 2 point shortfall.

COVID-19 only has a partial impact on Omdia’s overall 2020–2021 forecast updates, the company said. Other aspects have been factored in as well, including 2019 actual results, new and updated cloud services, and data centre footprint expansions.