OpenStack Fuels Surge of Regional Rivals to Top Cloud Providers

As the handful of top cloud providers expand around the world, battling it out in as many markets as they can get to, they are also increasingly competing with smaller regional players in addition to each other. One of the biggest reasons for this surge in regional cloud players is OpenStack.

The family of open source cloud infrastructure software has lowered the barrier for entry into the cloud service provider market. Combined with the rise of local regulatory and data sovereignty concerns and demand for alternatives to the top cloud providers, OpenStack has fueled an emergence of numerous regional cloud providers around the world over the last two years, according to the market research firm IDC.

Most of these regional players are using OpenStack, IDC said in a statement this week. The analysts expect growth in regional cloud providers to continue.

The announcement focuses on one major sector of the cloud market: Infrastructure-as-a-Service. Amazon Web Services continues to dominate it, “followed by a long tail of much smaller service providers.”

The firm forecasts the size of the global IaaS market to more than triple between 2015 and 2020, going from $12.6 billion last year to $43.6 billion four years from now.

This growth is poised to ensure continued growth in demand for data center capacity around the world, as both top cloud providers and smaller regional players expand their infrastructure to support more and more users.

Read more: How Long Will the Cloud Data Center Land Grab Last?

Unlike the early years of cloud, when the majority of the growth was driven by born-on-the-web startups and individual developers, the next phase of growth will be fueled to a large extent by enterprises.

Almost two-thirds of respondents to a recent IDC survey of more than 6,000 IT organizations said they were already using public cloud IaaS or were planning to start using it by the end of this year.

Enterprises are increasingly looking to public cloud services to help them make their businesses more agile, Deepak Mohan, a research director at IDC, said in a statement:

"This is bringing about a shift in IT infrastructure spending, with implications for the incumbent leaders in enterprise infrastructure technologies. Growth of public cloud IaaS has also created new service opportunities around adoption and usage of public cloud resources. With changes at the infrastructure, architectural, and operational layers, public cloud IaaS is slowly transforming the enterprise IT value chain."

See also: Top Cloud Providers Made $11B on IaaS in 2015, but It’s Only the Beginning