Managed Application & Network Services
Description
Companies in this industry provide application hosting and data storage services, data processing, time-sharing computing services, and related infrastructure and network services. Major companies include Amazon Web Services, Google (through Google Cloud Platform), IBM, Microsoft (through Microsoft Azure) and Oracle (all US-based), along with Alibaba Cloud (China).
The worldwide end-user spending on public cloud services grew over 20% to about $723.billion at the end of 2025 and is forecast to reach $1.48 trillion by 2029, according to Gartner. The US and Europe are established markets for cloud services, according to Precedence Research.
The US managed application and network services industry includes about 18,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $160 billion.
COMPETITIVE LANDSCAPE
Companies with the access to capital for new equipment and the ability to maintain large networks of data centers enjoy significant advantages. A highly skilled workforce is required to ensure data center uptime and access to data. Some companies may focus on a single category of services, such as managed website hosting, while others may offer a broad range of services to compete effectively in the market.
The US industry is concentrated: the largest 50 companies generate about 50% of revenue.
Companies in the industry may compete with providers of general information technology services and with the hosting businesses of data network operators. Potential customers who choose to maintain their own data centers are another source of competition.
Competitive Advantages:
Cloud Computing Expertise -- Customers continue to demand more sophisticated and fully featured cloud computing services, a trend that is driving managed application and network services industry growth.
Skilled Workforce -- Companies rely on highly skilled employees who know how to configure and maintain computer hardware, software, and networking systems. Data centers require advanced technical expertise to manage costs and keep to a schedule that reduces or eliminates downtime.
Access to Capital -- Companies need capital to acquire new equipment and expand their global reach.
Companies to Watch:
Amazon Web Services (AWS) is the most popular choice for cloud services by a wide margin. AWS continues to top Gartner's Magic Quadrant for Cloud IaaS, the researcher's annual ranking of cloud service providers. The company is the thought leader and reference point for all competitors, according to Gartner.
Alibaba is China's leading e-commerce company, and its Alibaba Cloud leads the market in that country, a key growth market for the industry. Alibaba is working to translate its success in China to other global markets.
Rackspace provides expertise for setting up in Amazon Web Services, Microsoft's Azure, and other cloud environments, whether public, private, or hybrid. The company also offers associated services such as data service, web hosting and web content hosting, mobile and web applications, and collaboration tools.
PRODUCTS, OPERATIONS & TECHNOLOGY
Business process management services account for more than 20% of the industry's revenue, followed by application service provisioning (about 20%) and web site hosting services (less than 20%). Data hosting companies may also offer colocation services, data storage, media storage and delivery services, and other technology support services.
With the availability of advanced data servers and high-speed data networks, demand is increasing for "cloud computing" services, including SaaS, platform as a service (PaaS), and infrastructure as a service (IaaS). These terms generally describe ways of delivering software applications and data management capabilities to customers over the internet from a centralized source. SaaS, or "on-demand software," typically describes an application that is hosted remotely and accessed by the end user through a web browser. PaaS is a way to lease access to resources (operating systems, development software, and database storage) to develop and deploy custom applications in the cloud. Providers of IaaS offer pools of physical servers, "virtual machines," or entire data centers that can be quickly provisioned for use by the customer.
Companies offering application and website hosting services operate large data centers equipped with multiple computer servers. Large companies may have multiple data centers in different parts of the country or in countries around the world. Highly specialized hyperscale data centers serve enormous companies like Amazon, Apple, Facebook, and Google. There were more than 990 hyperscale data centers worldwide at the end of 2023, according to Synergy Research. Data centers require large amounts of electricity to power servers and networking equipment, as well as cooling systems that allow the equipment to operate at peak efficiency. Support staff members must have expertise in computer and networking systems to configure and maintain servers.
In addition to data center equipment, companies use computer systems for managing their own internal processes, such as accounting, billing, and human resources. Most hosting companies maintain their own websites and use electronic communication for sales, marketing, and customer relations.
The worldwide end-user spending on public cloud services grew over 20% to about $723.billion at the end of 2025 and is forecast to reach $1.48 trillion by 2029, according to Gartner. The US and Europe are established markets for cloud services, according to Precedence Research.
The US managed application and network services industry includes about 18,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $160 billion.
COMPETITIVE LANDSCAPE
Companies with the access to capital for new equipment and the ability to maintain large networks of data centers enjoy significant advantages. A highly skilled workforce is required to ensure data center uptime and access to data. Some companies may focus on a single category of services, such as managed website hosting, while others may offer a broad range of services to compete effectively in the market.
The US industry is concentrated: the largest 50 companies generate about 50% of revenue.
Companies in the industry may compete with providers of general information technology services and with the hosting businesses of data network operators. Potential customers who choose to maintain their own data centers are another source of competition.
Competitive Advantages:
Cloud Computing Expertise -- Customers continue to demand more sophisticated and fully featured cloud computing services, a trend that is driving managed application and network services industry growth.
Skilled Workforce -- Companies rely on highly skilled employees who know how to configure and maintain computer hardware, software, and networking systems. Data centers require advanced technical expertise to manage costs and keep to a schedule that reduces or eliminates downtime.
Access to Capital -- Companies need capital to acquire new equipment and expand their global reach.
Companies to Watch:
Amazon Web Services (AWS) is the most popular choice for cloud services by a wide margin. AWS continues to top Gartner's Magic Quadrant for Cloud IaaS, the researcher's annual ranking of cloud service providers. The company is the thought leader and reference point for all competitors, according to Gartner.
Alibaba is China's leading e-commerce company, and its Alibaba Cloud leads the market in that country, a key growth market for the industry. Alibaba is working to translate its success in China to other global markets.
Rackspace provides expertise for setting up in Amazon Web Services, Microsoft's Azure, and other cloud environments, whether public, private, or hybrid. The company also offers associated services such as data service, web hosting and web content hosting, mobile and web applications, and collaboration tools.
PRODUCTS, OPERATIONS & TECHNOLOGY
Business process management services account for more than 20% of the industry's revenue, followed by application service provisioning (about 20%) and web site hosting services (less than 20%). Data hosting companies may also offer colocation services, data storage, media storage and delivery services, and other technology support services.
With the availability of advanced data servers and high-speed data networks, demand is increasing for "cloud computing" services, including SaaS, platform as a service (PaaS), and infrastructure as a service (IaaS). These terms generally describe ways of delivering software applications and data management capabilities to customers over the internet from a centralized source. SaaS, or "on-demand software," typically describes an application that is hosted remotely and accessed by the end user through a web browser. PaaS is a way to lease access to resources (operating systems, development software, and database storage) to develop and deploy custom applications in the cloud. Providers of IaaS offer pools of physical servers, "virtual machines," or entire data centers that can be quickly provisioned for use by the customer.
Companies offering application and website hosting services operate large data centers equipped with multiple computer servers. Large companies may have multiple data centers in different parts of the country or in countries around the world. Highly specialized hyperscale data centers serve enormous companies like Amazon, Apple, Facebook, and Google. There were more than 990 hyperscale data centers worldwide at the end of 2023, according to Synergy Research. Data centers require large amounts of electricity to power servers and networking equipment, as well as cooling systems that allow the equipment to operate at peak efficiency. Support staff members must have expertise in computer and networking systems to configure and maintain servers.
In addition to data center equipment, companies use computer systems for managing their own internal processes, such as accounting, billing, and human resources. Most hosting companies maintain their own websites and use electronic communication for sales, marketing, and customer relations.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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