CLOUD NATIVE SOFTWARE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The cloud native software market size was estimated at US$ 5.8 Billion in 2023 and is expected to reach US$ 46.88 Billion by 2030, grow at a compound annual growth rate (CAGR) of 34.8% from 2023 to 2030.

Cloud Native Software Market Opportunities:

• Adoption in Small and Medium Businesses: Increasing adoption of cloud-native software among SMBs provides significant opportunities for market growth. Containerized micro services help SMBs accelerate application delivery with limited resources. Cloud-native technologies enable easier deployment, scaling, and management without large IT teams. Vendors are offering solutions tailored for SMBs. As per estimates, over 65% of SMBs will adopt cloud-native technologies by 2025. The growing SMB demand creates new expansion opportunities.
• Applicability across Diverse Verticals: The cloud native software market has growth opportunities across verticals like healthcare, retail, manufacturing, government, etc. For instance, in healthcare, cloud native technologies can enable compliant handling of sensitive patient data while providing the flexibility to scale up telehealth platforms rapidly. In manufacturing, it allows connecting legacy industrial machinery to cloud-based analytics and AI to enable smart factories. Vendors can expand their capabilities to target more verticals. According to reports, cross-industry adoption of cloud-native software will grow at over 15% CAGR through 2030.
• Partnerships and Acquisitions: Strategic partnerships and acquisitions between technology vendors, cloud providers, system integrators, and service providers to enhance their cloud-native capabilities are creating new prospects. For instance, recent partnerships between AWS-Salesforce (AWS uses Salesforce to develop a specific “cloud journey” plan for a customer, and then aligns its sales and operations teams with the information, tools) and Google Cloud-Wipro (Wipro is proud to be a Global System Integrator partner for Google Cloud, delivering unparalleled cloud services, AI, machine learning and security) aim to develop cloud-native solutions tailored for industries. Acquisitions like IBM-Red Hat and VMware-Pivotal Software consolidate cloud-native software stacks. Such deals can potentially accelerate cloud-native adoption across enterprises. In 2021, Anthropic has enhanced its AI safety infrastructure by integrating Scalyr's potent logging and monitoring features, which are tailored for cloud-based applications. Anthropic to provide more comprehensive tools to help businesses ensure their AI systems behave securely and reliably regardless of where they are deployed. Similarly, in 2022, VMware partnered with Anthropic to further strengthen the security and trustworthiness of AI models running on VMware platforms.
• Incorporation of Emerging Technologies: Incorporation of cutting-edge technologies like Artificial intelligence (AI) / Machine learning (ML), Internet Of Things (IoT), and block chain with cloud-native software provides new business opportunities. Cloud-native approach allows easy integration and delivery of these technologies to end users. For instance, combining AI/ML tools with cloud-native stacks enables faster model development and deployment. Block chain-based cloud-native apps allow new decentralized models. 5G enables rapid data transfer for cloud-native mobile apps. Adoption of such emerging technologies using cloud native software provides new opportunities for vendors. As per data from the U.S. Department of Energy's Lawrence Berkeley National Laboratory, the worldwide installed stock of IoT devices is estimated to grow from 14.20 billion devices in 2020 to 30.90 billion devices in 2025.

Cloud Native Software Market Trends:

• Increased Adoption of Micro services: Businesses continue to adopt microservices architecture for its scalability and flexibility. Microservices allow for the rapid development and deployment of individual components without affecting the entire system, which is valuable for continuous integration and continuous delivery practices. According to data from McKinsey's 2021 Cloud Survey, over 60% of organizations surveyed stated they had increased their adoption of container technologies and Kubernetes for orchestration in the past year alone.
• Emphasis on Observability and Monitoring: With the dynamic nature of cloud-native applications, observability and monitoring become crucial to assessing the health of applications and infrastructure. Tools such as Prometheus for monitoring and Grafana for visualization are widely used in cloud-native environments. According to reports from the Cloud Native Computing Foundation in 2022, open source observability projects like Prometheus and Grafana have seen major increases in contributions and code commits over the past year, demonstrating the growing importance of these solutions for developers and companies building cloud native systems.
• Growth in Server less Computing: Server less computing, which abstracts the underlying infrastructure away from the developer, is gaining traction. It promotes a cost-effective model where businesses only pay for the actual compute time their applications use, further reducing overhead. According to a 2021 report by the Cloud Native Computing Foundation, over 70% of organizations surveyed believed server less technologies will be important for their cloud native development strategy.
• Hybrid and Multi-cloud Strategies: Enterprises are increasingly adopting hybrid and multi-cloud strategies to avoid vendor lock-in and optimize cloud expenditures. These strategies also provide the flexibility to deploy applications across different cloud environments based on specific requirements like compliance, data sovereignty, or latency. According to data from RedHat's 2022 Global Tech Outlook survey of over 2300 IT decision makers, currently, 63% of enterprises employ a hybrid cloud strategy, and the uptake of multicloud environments is on the rise.

Cloud Native Software Market Restraints:

• Data Security and Privacy Concerns: Data security and privacy concerns pose challenges for cloud-native software adoption. Though microservices offer isolation, data exposure risks persist, especially in public cloud deployments. Containers share the host kernel, increasing attack surfaces. While encryption helps protect data in transit and at-rest, vulnerabilities can allow data breaches. Ensuring compliance with regulatory requirements for data in cloud-native settings can be demanding. For highly sensitive applications, organizations prefer private clouds or on-premise hosting. Addressing security and privacy concerns is an important problem to solve. Storing and processing sensitive data in the cloud requires robust encryption and security protocols to prevent data breaches or unintended data exposure.
• Complexity of Micro services Management: Though micro services architecture enables flexibility, the complexity of managing a high volume of services creates adoption barriers. As the quantity of microservices escalates, the complexity of monitoring their interconnections, deployments, and managing version control increases exponentially. Performance monitoring and troubleshooting also become difficult. It requires high organizational DevOps maturity. There is also the overhead of operating multiple database instances. Lack of internal expertise in containers and orchestration is hampering adoption among enterprises. Easing these management burdens will be key. Micro services require robust networking capabilities for service-to-service communication, which can become complex as the number of services increases.
• Challenges in Legacy Modernization: Difficulties in transitioning traditional monolithic programs to cloud-native architectures act as a barrier to their broader acceptance. Re-architecting huge legacy codebases into independent micro services requires considerable time and cost. Testing and ensuring continued functioning post-migration is also difficult. For some complex legacy systems, the ROI of migration may be unclear or negative. Maintaining legacy systems and cloud-native stacks in parallel also increases overhead. Developing easy migration pathways through incremental modernization is vital for large enterprises. Organizations in regulated industries may have more stringent constraints on how data is stored, processed, and transmitted, which can complicate the move to cloud native solutions.

Recent Developments

New product launches

• In March 2022, IBM (IBM is known for its hardware and software products, including computers, servers, storage systems and networking equipment) launched Cloud Native Environment on IBM zSystems Mainframe to enable cloud-native application development. It provides access to common cloud-native open-source tools for building and deploying applications.
• In April 2022, SAP (It develops enterprise software to manage business operations and customer relations. The company is the world's leading enterprise resource planning software vendor) launched RISE with SAP for SAP S/4HANA Cloud to provide an innovative cloud ERP solution. It simplifies business processes and helps transition to intelligent enterprises.
• In June 2021, Salesforce (It provides customer relationship management software and applications focused on sales, customer service, marketing automation, e-commerce, analytics, and application development) launched Hyperforce, a new architecture enabling customers to host applications on major public clouds. It delivers a scalable, secure, and flexible platform for building cloud-native apps.

Acquisition and partnerships

• In May 2022, Salesforce partnered with AWS (a subsidiary of Amazon that provides on-demand cloud computing platforms and APIs to individuals, companies, and governments, on a metered, pay-as-you-go basis) to launch new integrated offerings for building cloud-native applications. This partnership combines Salesforce's CRM capabilities with AWS's cloud infrastructure.
• In June 2022, SAP partnered with Coursera (Coursera works with universities and other organizations to offer online courses, certifications, and degrees in a variety of subjects) to provide online training courses on building enterprise applications with SAP's Business Technology Platform. It aims to skill professionals in cloud-native techniques.
• In October 2021, IBM acquired BoxBoat, a DevOps consultancy and enterprise Kubernetes certified service provider. This acquisition strengthened IBM’s hybrid cloud and AI capabilities for cloud-native application development.

Figure 1. Global Cloud Native Software Market Share (%), by Deployment Model, 2023

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Top companies in Cloud Native Software Market

• Microsoft
• IBM
• Salesforce
• SAP
• Adobe
• Oracle
• VMware
• Red Hat
• Rancher Labs
• Sysdig
• Dynatrace
• DataDog
• Splunk
• New Relic
• GitLab
• CircleCI
• CloudBees
• Snyk
• Twistlock
• Qualys

Definition: Cloud native software utilizes cloud computing models like IaaS (infrastructure as a service), PaaS (platform as a service), and SaaS (software as a service), and public, private, and hybrid clouds to provide applications as micro services. It allows enterprises to build, deploy and manage portable, scalable applications rapidly in modern, dynamic environments. Cloud native apps are designed based on containers, micro services, immutable infrastructure, and declarative APIs. It provides developers with a faster time to market through DevOps, continuous delivery, and infrastructure automation. A cloud-native approach enables easier adoption of emerging technologies while reducing vendor lock-in. The global cloud native software market is being driven by the greater business agility, scalability, and cost efficiency offered by cloud-native applications.

Cloud native software utilizes cloud computing to provide applications as micro services. It allows enterprises to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds. The key drivers of the market include the rising shift from monolithic to cloud-native architectures, the increasing adoption of micro services, and the growing need for rapid application development.

The cloud native software market is segmented by component, deployment modeis boosting market growth. Monolithic apps have huge codebases that make development, testing, and updating challenging. Cloud-native's component-based micro services architecture enables easier app development with independent services. Containers package apps and dependencies together for consistent deployment. Orchestration manages container lifecycles and utilization. Many companies are modernizing legacy monolithic apps to cloud-native. As per data from Cloud Scene, which tracks deployments and usage of open source technologies, the number of organizations using micro services has grown significantly from 2020 to 2022. The report found a 42% rise in the number of microservices deployed on cloud platforms during this period.