Hyperscaler cloud marketplaces to reach USD $85 billion by 2028

Enterprise software sales through hyperscaler cloud marketplaces, such as those operated by AWS, Microsoft, and Google Cloud, are forecasted to reach USD $85 billion by 2028, increasing from USD $16 billion in 2023. This projection is outlined in a new research report by Canalys titled "Now and next for hyperscaler marketplaces".

The report highlights how the availability of cloud credits for third-party purchases is reshaping enterprise customer procurement behaviour, vendor sales strategies, and channel models. Currently, most vendor sales via these marketplaces are made directly to end customers. However, channel partners are expected to play a growing role, with Canalys predicting that over 50% of marketplace sales will flow through the channel by 2027.

Enterprise customers have committed to spending over USD $360 billion on cloud services from the top three hyperscalers on a multi-year basis. These enterprises are increasingly using their existing cloud credits to purchase third-party software and SaaS through hyperscaler marketplaces. AWS Marketplace remains the leader in terms of sales volume, but Microsoft and Google Cloud are actively working to close the gap.

Amid IT budget pressures, enterprises are finding the opportunity to use pre-approved cloud budgets to source a wide array of software and cybersecurity products while benefitting from simplified billing and consolidated purchasing highly compelling. This scenario is luring vendors from across the technology spectrum to sell their products through hyperscaler marketplaces. Notable vendors like CrowdStrike and Snowflake have publicly reported reaching USD $1 billion in cumulative sales through these marketplaces. Other significant vendors, including Cisco, Citrix, IBM, NetApp, Nutanix, Red Hat, Salesforce, ServiceNow, and Zoom, have also launched or expanded their sales on hyperscaler marketplaces in 2024.

Additionally, smaller digital-native ISVs built on the leading cloud platforms are using these marketplaces as their primary route to market. Simultaneously, hyperscalers are investing heavily in marketplace co-sell resources, demand generation, sales incentives, and channel programs. These include initiatives such as AWS' Channel Partner Private Offers, Microsoft's Multiparty Private Offers, and Google Cloud's Marketplace Channel Private Offers, all designed to attract more vendors to their platforms by enabling customized offers for customers while maintaining margins for channel partners.

Alastair Edwards, Chief Analyst at Canalys, remarked on the dynamic, stating, "The channel has concerns about the rise of marketplaces, but both hyperscalers and vendors acknowledge the vital role of channel partners in driving customer adoption and growth. Customers often prefer buying through trusted partners for help with managing cloud commitments and accessing professional services and technical expertise when sourcing complex technologies from multiple marketplaces."

IT distributors are facing increased competition from hyperscaler marketplaces, which are acting as digital distribution platforms. However, distributors are seen as essential for reducing operational challenges for partners and vendors as global adoption of these marketplaces grows. This is particularly important for supporting the increasing number of second-tier partners whose customers are shifting to purchasing via marketplaces. Canalys anticipates the development and expansion of new programs, such as AWS DSOR, to support greater distributor involvement.

Channel partners remain crucial for ensuring that customers can access the necessary technologies, regardless of their buying preferences. Edwards further noted, "A seamless buying experience is essential, and success will depend on greater API-led integration between hyperscalers, distributors, and partner platforms."