Serverless Computing

The innovative cost dynamics of serverless computing allow more customers onto the cloud without breaking the bank.

Overview

The latest evolution in cloud computing helps real-time, automated capacity

Serverless computing refers to applications and services that run on a third-party vendor’s off-site server platform (such as Amazon Web Services [AWS] Lambda Platform). Serverless computing distinguishes itself from physical in-house servers and cloud computing based on how it handles scaling or meeting variations in demand. With physical servers, scaling up entails buying and maintaining new hardware, while cloud computing requires renting more resources. In contrast, serverless computing allows automatic, real-time scaling of server resources based on actual usage.

Serverless computing is an evolution of cloud computing, a Function-as-a-service (FaaS), with which it is often treated synonymously since serverless platforms handle the function of running the applications.

Industry Updates

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Market Sizing

The US Serverless Computing market could reach USD 11.2 billion–14 billion by 2028

Conservative case

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Base case

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Use cases


Serverless computing is commonly used across various industries, with the consumer discretionary and communications sectors being the most prominent. Specifically, this includes the diversified consumer services subsegment for consumer discretionary, as well as media and entertainment under communications.

The adoption levels for software infrastructure management are relatively high, as serverless functions platforms enable enterprises to automatically scale server resources for applications in real time, based on actual usage. Moreover, analytics and integration solutions have been commonly used to help enterprises query large databases and streamline data processing for applications.

We have identified key serverless computing use cases below:

Market Mapping


Cloud computing giants such as Amazon (AWS Lambda), Google (Google Cloud Functions), Microsoft (Azure Functions), and IBM (IBM Cloud Functions) handle serverless computing platforms and the core service of providing server capacity.

The startups in the industry mainly function as service providers bridging serverless computing vendors with end users. Key among such support services are development tools, support and consulting, open source codes, and analytics and integrations.

The Disruptors


Disruptors in the serverless computing space drive innovation and agility, fill niche markets with specialized solutions, and enhance the ecosystem through complementary tools and educational outreach. 

Companies like Netlify, Vercel, and Serverless Inc. showcase their impact by simplifying deployment, providing complementary services, and lowering entry barriers. Their contributions significantly expand the adoption and advancement of serverless technologies.

Funding History

Competitive Analysis


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Product Overview
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Company profile
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Incumbents


Three cloud computing giants dominate the core serverless computing market. A 2023 survey found that 45%–75% of AWS, Microsoft, and Google Cloud users were using their respective serverless functions, with the highest usage seen with AWS users at around 72%.

In addition to serverless platform resources, these three leaders offer a range of support services and tools, including DevOps (which combines the development and operations of functions) and developer tools, application programming interface (APIs, which facilitate interactions between software intermediaries) management, AI, machine learning and Internet of Things (IoT) algorithms, among others, to help optimize their use. These offerings can vary among incumbents, and offer a value-add beyond the common disruptor offerings of open source and analytics, which incumbents tend to offer as well.

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Notable Investors


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Overview

The latest evolution in cloud computing helps real-time, automated capacity

Serverless computing refers to applications and services that run on a third-party vendor’s off-site server platform (such as Amazon Web Services [AWS] Lambda Platform). Serverless computing distinguishes itself from physical in-house servers and cloud computing based on how it handles scaling or meeting variations in demand. With physical servers, scaling up entails buying and maintaining new hardware, while cloud computing requires renting more resources. In contrast, serverless computing allows automatic, real-time scaling of server resources based on actual usage.
Serverless computing is an evolution of cloud computing, a Function-as-a-service (FaaS), with which it is often treated synonymously since serverless platforms handle the function of running the applications.

Serverless computing is the latest development in server management

Companies often use serverless computing to complement their cloud products, with the former running programs and functions in addition to the underlying cloud storage and infrastructure. 
AWS users use serverless computing to complement cloud infrastructure
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