PaaS market to reach $14 billion by 2017, IDC says

The platform-as-a-service industry will grow quickly due to high interest in faster application development and lower IT costs

The global market for PaaS (platform as a service) is set to leap from US$3.8 billion last year to more than $14 billion in 2017 as companies look to cut infrastructure costs and speed up application development, according to newly released research from analyst firm IDC.

Overall, the compound annual growth rate for PaaS during this period will be roughly 30 percent, compared to the 4 percent growth rate this year for IT spending overall, according to IDC.

The expected rise in PaaS spending is due to "indications of faster acceptance of the competitive PaaS buying proposition and new information concerning past years, particularly related to the acceptance of and market penetration of Microsoft Azure," the report states.

IDC breaks PaaS into a number of sub-segments, including APaaS (application platform as a service), DPaaS (database platform as a service), cloud-based test and IPaaS (integration platform as a service).

There's also been an emergence of PaaS providers focusing on specific industries, but these companies are "hedging their risks" by linking up with generalized PaaS players such as Salesforce.com, Microsoft and IBM, IDC said. "By doing so, they don't have to reinvent the most common platform services and can focus on developing their own value-add," the report states.

In general, companies are flocking to public PaaS because doing so can lower IT infrastructure spending while providing high availability and scale, IDC said.

It's also possible to create applications more quickly because PaaS makes it easier to perform functional and load testing, as well as to deploy software, according to the report.

This in turn is creating a murky picture of sorts for programmers. "One of the biggest unknowns related to public PaaS is its potential impact on IT staff," the report states. "Because public PaaS improves developer productivity by a factor of two or more, what happens to the developer workforce? Do enterprises make more use of IT or elect to take some or all of the benefit in terms of reducing the developer workforce? The answer lies somewhere in the middle."

On a geographic basis, 65.2 percent of PaaS revenue was derived from the Americas in 2012, and that's not expected to change much by 2017, dropping only to 62.3 percent. This is because many of the initial PaaS startups have their roots in the Americas, resulting in a "revenue bias," IDC said.

But PaaS revenue growth in Asia-Pacific including Japan "continues to boom," with 14.1 percent market share in 2012 and an expected 19.0 percent in 2017.

Europe, the Middle East and Africa accounted for 20.7 percent of PaaS revenue in 2012, but that total is expected to drop slightly, to 18.7 percent, by 2017.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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