IaaS Cloud Networking Gains in Importance as Organizations Seek Seamless Operations Across Multiple Platforms, According to IDC

NEEDHAM, Mass.–(BUSINESS WIRE)–#ADCaaS–The importance of networking to and within cloud environments has grown significantly for enterprise customers as more and more applications, workloads, and data are moved to the cloud. International Data Corporation (IDC) estimates that worldwide revenue for public cloud-based infrastructure as a service (IaaS) networking services will reach $19.4 billion in 2023. The market is expected to see strong growth through 2026 with a compound annual growth rate (CAGR) of 27.9% for the period from 2022 to 2026.

“IaaS network services play a critical role in helping organizations build modern digital IT and business capabilities that have all the cloud characteristics of agility, flexibility, resilience, elasticity, and scalability,” said Taranvir Singh, research manager, Cloud Networking Services, IDC.

IDC defines IaaS networking as public cloud-based IaaS network services in which all the network infrastructure and services are elastic and on demand. They are provisioned and consumed just like other cloud services. The five major segments of the IaaS networking market included in IDC’s research are direct cloud connects/interconnects, cloud WAN (transit), ADCaaS (IaaS load balancing), IaaS service mesh, and cloud VPNs (to IaaS clouds).

The largest segment of the IaaS networking market is cloud connects/interconnects, which accounts for more than half of all revenue and is forecast to expand at a 21.1% CAGR. The second-largest technology segment, cloud WAN (cloud middle-mile and core transit networks), is also forecast to be the fastest-growing category with a five-year CAGR of 112.3%. IaaS service meshes will see strong growth as well, with a CAGR of 68.2% while ADCaaS and cloud VPNs will experience more modest growth with CAGRs of 17.5% and 11.8% respectively.

“Cloud connects/interconnects are foundational to every cloud strategy as these make it possible for enterprises to quickly and securely connect their on-premises and edge environments to IaaS providers. The rise of multicloud and SaaS applications that meet the demands of the modern distributed workforce in enterprises is the driver of rapid growth in cloud WANs and other IaaS network services,” said Rohit Mehra, group vice president, Network and Telecommunications at IDC.

IaaS cloud providers have recognized the importance of networking to their customers and have invested heavily to expand their dedicated IaaS networking solutions, which have become integral, complementary assets to their core IaaS compute and storage offerings. Adoption of these services is driven by customer propensity to adopt network infrastructure and services, which have cloud-like networking capabilities and are consistent with the organizations’ hybrid and multicloud strategies.

In 2022, the top 5 vendors in the public cloud IaaS market (Amazon Web Services, Microsoft, Google, Alibaba, and Tencent) were also the leaders in the IaaS cloud networking market, making use of their existing technical expertise and infrastructure capabilities. Combined, the top 5 IaaS cloud networking services providers accounted for 85.7% of the total market spend in 2022 with AWS capturing more than half the total.

The IDC report, Worldwide IaaS Networking Forecast, 2022-2026 (Doc #US49936822), provides a forecast of infrastructure-as-a-service (IaaS) networking from 2022 through 2026, and it includes historical market data from 2020. Worldwide IaaS networking market shares for 2022 can be found in the IDC report, Worldwide IaaS Networking Market Shares, 2022: Distributed Workloads Drive Growth (Doc #US51001323).

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.


Michael Shirer



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