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

The global Cloud Native Software market size was valued at US$ 5.80 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 utilizes cloud computing to provide applications as microservices. 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, increasing adoption of microservices, and growing need for rapid application development.

The Cloud Native Software Market is segmented by component, deployment mode, organization size, vertical, and region. By component, the platform segment accounted for the largest market share in 2022. The growth in this segment can be attributed to the wide adoption of cloud native platforms such as Kubernetes, Docker, and OpenShift that provide greater agility, portability, and scalability.

Cloud Native Software Market Regional Insights

• North America is expected to be the largest market for Cloud Native Software Market during the forecast period, accounting for over 40.5% of the market share in 2022. The growth of the market in North America is attributed to early adoption of cloud-based solutions, presence of leading cloud service providers, and increasing investments in digital transformation by enterprises in the region.
• The Europe market is expected to be the second-largest market for Cloud Native Software Market, accounting for over 32.2% of the market share in 2022. The growth of the market in is attributed to high technology adoption in countries like UK, Germany, and France along with government regulations supporting digitalization.
• The Asia Pacific market is expected to be the fastest-growing market for Cloud Native Software Market, with a CAGR of over 16.3% during the forecast period. The growth of the market in Asia Pacific is attributed to rapid advancements in IT infrastructure, increasing adoption of cloud-based applications, and high growth of e-commerce and web-based businesses in the region.

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

Cloud Native Software Market Drivers:

• Increasing Adoption of Microservices Architecture: The adoption of microservices architecture is driving the growth of the cloud native software market. Microservices break down applications into independently deployable, small modular services, providing more agility and flexibility. Companies are moving towards microservices to decompose monolithic applications. Microservices architecture enables easier application development, testing, and release of new features. The cloud-native approach combines containers and microservices to enable faster time to market.

• Need for Faster Application Development: The growing need for faster application development to keep pace with business demands is fueling the growth of cloud-native software. The traditional monolithic approach can be slow and complex for app development and deployment. Cloud-native technologies like containers and orchestration help accelerate the development lifecycle. With DevOps and agile methodology, businesses can release new features and updates more frequently through continuous development and deployment.
• Increased Scalability and Flexibility: Scalability and flexibility enabled by cloud-native software is driving its adoption. Monolithic applications have limited scalability as the codebase grows. But with microservices and containers, apps can be made independently scalable. New instances can be spun rapidly to meet demand spikes. The orchestration layer helps optimize resource utilization with auto-scaling. Cloud native approach also provides portability across different environments, from on-premise data centers to multi-cloud. This makes it easier to avoid vendor lock-ins and optimize spending. The increased scalability and flexibility are key growth drivers.

• Shift from Monolithic to Cloud-Native Architectures: The shift from monolithic architectures to cloud-native is boosting market growth. Monolithic apps have huge codebases that make development, testing and updating challenging. Cloud-native's component-based microservices 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.

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 microservices 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, Google Cloud-Wipro aim to develop cloud-native solutions tailored for industries. Acquisitions like IBM-Red Hat, VMware-Pivotal Software consolidate cloud-native software stacks. Such deals can potentially accelerate cloud-native adoption across enterprises. This trend presents lucrative partnership and expansion opportunities.
• Incorporation Of Emerging Technologies: Incorporation of cutting-edge technologies like AI/ML, IoT, blockchain 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. Blockchain-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.

Cloud Native Software Market Trends:

• Adoption in Small and Medium Businesses: Increasing adoption of cloud-native software among SMBs provides significant opportunities for market growth. Containerized microservices 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, Google Cloud-Wipro aim to develop cloud-native solutions tailored for industries. Acquisitions like IBM-Red Hat, VMware-Pivotal Software consolidate cloud-native software stacks. Such deals can potentially accelerate cloud-native adoption across enterprises. This trend presents lucrative partnership and expansion opportunities.

• Incorporation Of Emerging Technologies: Incorporation of cutting-edge technologies like AI/ML, IoT, blockchain 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. Blockchain-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.

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. Compliance adherence for regulated data in cloud-native environments can be challenging. For highly sensitive applications, organizations prefer private clouds or on-premise hosting. Addressing security and privacy concerns is an important problem to solve.

• Complexity of Microservices Management: Though microservices architecture enables flexibility, the complexity of managing a high volume of services creates adoption barriers. Tracking service interdependencies, deployments, and version control gets exponentially complex as microservices count increases. Performance monitoring and troubleshooting also becomes difficult. It requires high organizational DevOps maturity. There is also 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.

• Challenges in Legacy Modernization: The challenges in migrating legacy monolithic applications to cloud-native presents a restraint for wider adoption. Re-architecting huge legacy codebases into independent microservices 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 overheads. Developing easy migration pathways through incremental modernization is vital for large enterprises.

Recent Developments

New product launches

• In March 2022, IBM 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 June 2021, Salesforce 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.
• In April 2022, SAP launched RISE with SAP for SAP S/4HANA Cloud to provide an innovative cloud ERP solution. It simplifies business process and helps transition to intelligent enterprise.

Acquisition and partnerships

• 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.
• In June 2022, SAP partnered with Coursera 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 May 2022, Salesforce partnered with AWS to launch new integrated offerings for building cloud-native applications. This partnership combines Salesforce's CRM capabilities with AWS's cloud infrastructure.

Figure 2. Global Cloud Native Software Market Share (%), by Type, 2023

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, PaaS, SaaS and public, private, hybrid clouds to provide applications as microservices. It allows enterprises to build, deploy and manage portable, scalable applications rapidly in modern, dynamic environments. Cloud native apps are designed based on containers, microservices, immutable infrastructure and declarative APIs. It provides developers with faster time to market through DevOps, continuous delivery and infrastructure automation. 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.

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