Marketplaces to Explode
By Craig Galbraith
As if marketplaces weren’t already red hot, look for this way of finding, buying and managing cloud-based applications to explode in 2023. So much so that research firm Canalys is predicting growth in the AWS Marketplace will make the hyperscaler a top 10 global distributor by the year 2025.
Notably, notes Canalys chief analyst Jay McBain, is the rise in cybersecurity vendors selling in cloud marketplaces. Several are reporting 600% growth year over year, and by 2025, “cloud marketplaces will grow to over US $45 billion — double our pre-pandemic forecast, representing an 86% CAGR.”
In fact, Palo Alto Networks earlier this fall told Silicon Angle that marketplaces run by Microsoft, Google Cloud and AWS will provide its biggest source of revenue growth in the years to come.
“Cloud marketplaces are making it more cost-efficient for us to distribute to our customers seamlessly and easily,” Prem Iyer, Palo Alto’s VP of ecosystems, told the website. What’s driving the marketplace surge overall? Canalys’ McBain has some ideas.
“Multiple converging trends, including new vendor business models, a changing buyer demographic, layered and deeply integrated ‘building block’ solutions, lower marketplace fees, enterprise commitments now including third-party products and services, and expanded marketplace functionality to include multiple private partner offers,” McBain told Channel Futures.
Meantime, the team at Gartner reports that enterprise customers of all sizes now buy more than half of their services from cloud marketplaces.
Furthermore, Tackle.io, a services firm that helps vendors get listed on cloud marketplaces, is itself growing quickly, at a staggering rate of nearly 8,000% from 2018-2021. A 2022 report from the company notes that marketplaces have evolved from “transaction vehicles to become a leading revenue channel for companies of all sizes and industries.”
The Tackle.io report makes some predictions of its own for 2023. The company is even more bullish on marketplaces than is Canalys, forecasting $50 billion in spending by the end of 2025. That’ll be more than triple its forecast of $15 billion – a sizable number already – for next year.
Moreover, Tackle.io suggests there will be significant growth in line-of-business buying through marketplaces in 2023, another trend we at Channel Futures have been following for a few years now.
Channel Impact
While some have expressed concern that marketplaces could be a threat to the traditional channel partner, we at Channel Futures believe therein lies more opportunity than peril. Though marketplaces can help the customer bypass the partner, the consultative expertise and relationships that channel partners have will remain critical in the end-to-end purchasing process.
As Chris Hill, regional vice president, cloud and strategic alliances at Barracuda, told our Christine Horton earlier this year, marketplaces “create intuitive, attractive, user-friendly experiences for [partners]’ customers who confidently self-service and source their Christmas shopping via Amazon and want to emulate that experience for business procurement. That’s whether they be SMBs, enterprise, or somewhere in between. Those that cater to this shift will keep customers coming back for more. [They] will carve themselves a space in what promises to be a fundamental pillar of the channel in the coming years.”
In addition, Kirk Horton, VP, channels and partners at Netacea, the cybersecurity firm, said the growing appetite for cloud marketplaces makes for a critical addition to a partner’s portfolio.
“They provide a one-stop shop for customers’ solution needs,” said Horton. “They enable new technologies and use cases for a variety of builds across all models, from applications to security solutions. This is a new and exciting opportunity for service providers. It’s imperative that security providers partner with these marketplaces to easily enable the use of their technology across a widely distributed customer base around the world.”
