The “dizzying speed” at which cloud marketplaces are accelerating has forced analysts to double their previous growth forecasts

Canalys now expects that by 2025, cloud marketplaces will grow to more than $45 billion, representing an 84% CAGR.

Canalys’ Steven Kiernan

“We under-called it,” explained Steven Kiernan, vice president at Canalys. “Cloud marketplaces are accelerating at such a dizzying speed that we’ve doubled our pre-pandemic forecast. That’s roughly 2x our previous forecast.”

Canalys said cloud marketplaces have moved on from a future-looking trend, accelerated by the pandemic. They are now strategic and actionable routes-to-market (RTM) conversation with thousands of software and hardware vendors and services partners.

Hyperscalers Driving Growth

Hyperscaler cloud marketplaces from Amazon Web Services (AWS), Microsoft and Google Cloud are leading this momentum.

The hyperscalers are now reporting several billion-dollar customer commitments through enterprise cloud consumption credits. The large cloud marketplaces have lowered fees from upwards of 20% down to 3%, enabling vendors to fund multipartner offers inside the transaction, added Canalys.

Additionally, several cloud marketplace participants, specifically cybersecurity ISVs, are publicly reporting as much as 600% year-on-year growth via this channel.

The analyst also referenced one “bellwether story.” Services firm, Tackle.io, provides turnkey services to help vendors get listed and drive performance in cloud marketplaces. Tackle just climbed to number 17 on Deloitte’s Fast 500 list this year with 7,977% growth over three years.

“The only question now is, is Canalys under-calling the 84% compounded growth number going forward?” asked Kiernan.

Pressure on Legacy Distribution

Hyperscaler marketplace momentum will place greater competitive pressure on legacy distribution, Canalys said. But as more complex technologies are consumed via marketplaces, end customers are also turning to trusted partners to help them discover, procure and manage marketplace purchases.

By 2025, Canalys conservatively forecasts that almost a third of marketplace procurement will be done via channel partners on behalf of their end customers.

Ignition’s Sean Remnant

However, Sean Remnant, chief strategy officer at distributor Ignition Technology, says distribution differs from online marketplaces when it comes to adding value.

“The marketplace doesn’t manage partner programs,” he said. The marketplace doesn’t do partner enablement. [And] the marketplace doesn’t do pre-sales. There’s a ton of stuff that channel and distribution provide that marketplace doesn’t. It will facilitate the transaction, but it doesn’t add that extra value. That’s ultimately where everyone can keep their margin. But people are still learning on how to embrace it.”