Managed Application & Network Services
Companies in this industry provide application hosting and data storage services, data processing, time-sharing computing services, and related infrastructure and network services. Major companies include Amazon Web Services, Google (through Google Cloud Platform), IBM, Microsoft (through Microsoft Azure) and Oracle (all US-based), along with Alibaba Cloud (China).
The worldwide end-user spending on public cloud services is forecast to grow over 20% to about $600 billion in 2023, up from about $490 billion in 2022, according to Gartner. The US and Europe are established markets for cloud services.
The US managed application and network services industry includes about 18,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $160 billion.
Competitive Landscape
Companies with the access to capital for new equipment and the ability to maintain large networks of data centers enjoy significant advantages. A highly skilled workforce is required to ensure data center uptime and access to data. Some companies may focus on a single category of services, such as managed website hosting, while others may offer a broad range of services to compete effectively in the market.
The US industry is concentrated: the largest 50 companies generate about 50% of revenue.
Companies in the industry may compete with providers of general information technology services and with the hosting businesses of data network operators. Potential customers who choose to maintain their own data centers are another source of competition.
Competitive Advantages:
Cloud Computing Expertise -- Customers continue to demand more sophisticated and fully featured cloud computing services, a trend that is driving managed application and network services industry growth. Cloud adoption strategies are forecast to influence more than 50% of IT outsourcing deals through 2020, according to Gartner.
Skilled Workforce -- Companies rely on highly skilled employees who know how to configure and maintain computer hardware, software, and networking systems. Data centers require advanced technical expertise to manage costs and keep to a schedule that reduces or eliminates downtime.
Access to Capital -- Companies need capital to acquire new equipment and expand their global reach.
Companies to Watch:
Amazon Web Services (AWS) is the most popular choice for cloud services by a wide margin. AWS continues to top Gartner's Magic Quadrant for Cloud IaaS, the researcher's annual ranking of cloud service providers. The company is the thought leader and reference point for all competitors, according to Gartner.
Alibaba is China's leading e-commerce company, and its Alibaba Cloud leads the market in that country, a key growth market for the industry. Alibaba is working to translate its success in China to other global markets.
Rackspace provides expertise for setting up in Amazon Web Services, Microsoft's Azure, and other cloud environments, whether public, private, or hybrid. The company also offers associated services such as data service, web hosting and web content hosting, mobile and web applications, and collaboration tools.
Products, Operations & Technology
Business process management services account for about 25% of the industry's revenue, followed by application service provisioning (about 30%) and web
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