The enterprise cloud software market, led by technology giants AWS, Microsoft, and Google Cloud, is in full expansion. But let’s not forget about other relevant players in the public cloud such as Oracle Cloud and IBM, as well as European private cloud players like Stackscale (Grupo Aire) or OVHcloud. According to a recent report by Canalys, sales through these hyperscaler cloud marketplaces are projected to reach $85 billion by the year 2028. This figure represents a significant increase compared to the $16 billion recorded in 2023.
The evolution of the cloud market is redefining the purchasing behavior of enterprise customers and the strategies of providers. The availability of cloud credits for third-party purchases through these marketplaces is driving this transformation, as well as the emergence of new buyers prioritizing digital solutions.
The Role of the Channel in the New Market Dynamics
While most current sales through hyperscaler marketplaces are "direct" to end customers, Canalys estimates that by 2027, more than 50% of sales will be channeled through channel partners. This shift underscores the growing importance of the channel in the cloud ecosystem as providers seek strategies to maximize partner involvement.
Enterprise customers have committed over $360 billion in cloud services with the top three hyperscalers in the coming years. Some of this spending is shifting towards these providers’ marketplaces as companies seek to use cloud credits to acquire third-party software and SaaS solutions, taking advantage of simplified billing and consolidated purchasing.
Leadership and Competition in the Market
AWS Marketplace remains the leader in terms of sales volume, but Microsoft, Google Cloud, and Oracle Cloud are working to close this gap. Budget pressure in IT has made the opportunity to use pre-approved cloud budgets to access a wide range of software products and cybersecurity solutions very attractive to companies.
This situation is incentivizing providers across the technology spectrum to sell through hyperscaler marketplaces. Companies like CrowdStrike and Snowflake have already surpassed $1 billion in sales through these channels. Other major software and cybersecurity providers like Cisco, Citrix, IBM, NetApp, Nutanix, Red Hat, Salesforce, ServiceNow, and Zoom are also intensifying their presence in these markets.
Investments and Strategies to Attract Providers
Hyperscalers are making significant investments in joint sales resources, demand generation, sales incentives, and channel programs. These efforts include marketplace fee cuts to attract more providers. Models like AWS Channel Private Offers, Microsoft Multi-Party Private Offers, and Google Cloud Marketplace Channel Private Offers allow providers to create customized offers for their customers while maintaining attractive margins for the channel.
IT distributors face growing competition from marketplaces, which act as digital distribution platforms. However, distributors remain crucial in mitigating operational challenges for partners and vendors, supporting second-level partners whose customers prefer to buy through these channels. Canalys anticipates that the development and expansion of new programs, like AWS DSOR, will promote greater distributor participation in the ecosystem.
Conclusion
The enterprise cloud software market is undergoing a transformation, with hyperscalers playing a central role in shaping buying and selling strategies. The growing importance of the channel, competition among providers, and investments in marketplace resources are key factors shaping the future of this market. Seamless integration between hyperscalers, distributors, and partner platforms will be essential to ensure an optimal buying experience and success in this rapidly evolving environment.
Source: Canalys Study