AI to be bigger than IaaS and PaaS combined by 2025

$500bn a year to be spent on electro-brain and supporting tech vs $400bn on cloud infrastructure

Analyst firm IDC has predicted that by the year 2025 more money will be spent on artificial intelligence software and services than on infrastructure-as-a-service and platforms-as-a-service.

The firm on Wednesday published details of its Worldwide Semi-annual Artificial Intelligence Tracker, which predicted global spending of $341.8 billion this year – representing 15.2 per cent year-over-year growth.

Growth will accelerate to 18.8 per cent in 2022, leading IDC to predict the market is on track to pass $500 billion annual spend by 2024.

AI software currently dominates, accounting for 88 per cent of AI expenditure.

For the next couple of years, IDC reckons AI hardware will grow fastest, until AI services takes over from 2023. AI services will be a $50 billion market by 2025, IDC opined, with IT services likely to account for 80 per cent of spend and general business services accounting for the rest.

IDC's definition of AI includes applications software that puts it to work, AI infrastructure software and AI-related services.

IDC ranks spookware vendor Palantir as the leader by revenue among vendors of AI Platforms, with IBM in third place behind Microsoft. The beast of Redmond is in the top three of IDC's other AI software categories: Applications, System and Infrastructure Software, and AI Application Development & Deployment software. IBM, which led with AI before deciding hybrid clouds are its future, makes just one more appearance in the System and Infrastructure Software slot.

AI System Infrastructure Software is predicted to enjoy five-year CAGR of 14.4 per cent while accounting for roughly 35 per cent of all AI Software revenues. In the AI Applications market, IDC says growth of enterprise risk management wares will outperform CRM over the next five years.

AI Lifecycle Software is where you'll find the hottest action among AI Platform products.

Over in the public cloud, IDC has forecast infrastructure-as-a-service and platforms-as-a-service will crack $400 billion annual revenue in 2025, thanks to 28.8 per cent compound annual growth rate over the coming years.

Apparently you've done plenty of cloud migration already, and the market has shifted to app modernisation – because that gets you closer to what IDC called "agile application delivery and cloud operations".

PaaS and IaaS growth will also be driven by the need to scale data growth without also scaling capital expenditure.

"By 2022, IDC anticipates that almost half of an enterprise's products and services will be digital or digitally delivered, increasing the business's reliance on infrastructure (compute, storage, networking) to support more than traditional business applications," IDC opined. "Timely access to innovative infrastructure resources – both shared and dedicated – will be imperative to sustain the adaptive, resilient, secure, and compliant digital business models of the future." ®

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