Infrastructure-as-a-service (IaaS) continues to be a successful venture for technology companies and their clients so far this year. But what is IaaS, and how does it work?

IaaS is a variety of cloud computing in which third party providers such as Amazon and Microsoft host virtual resources over the internet on behalf of their customers. Small start-ups and well-known companies like Dropbox and Spotify alike are charged for the hosting of their websites and applications on a scalable, flexible basis – the advantage being that they only employ these services on-demand in the Cloud, according to their specific and changing business needs.

According to StateTechMagazine, the benefits of IaaS extend ‘far beyond cost savings’. Amongst these are increased agility, reliability, capacity management, disaster recovery and reduced admin – which all allow more time for businesses focus on business growth and getting to market.

Amazon Web Services (AWS) has been a notable success story. The multi-faceted giant recently announced that its web services generated sales of a tremendous £1.04bn in the first quarter of 2015. Amazon’s services allow big names such as Netflix and Uber– and even the CIA – to synchronise data, stream media, and send notifications.

According to the BBC, the figures reveal that Amazon’s cloud offering is the largest of its kind– coming as a bit of a surprise to some analysts. But Amazon has a tendency to reinvest profits back in to its ventures, and AWS is no exception as it seeks to innovate quickly, pass cost savings to customers and retain its 27% portion of the market.

Although Amazon has indicated that AWS could even surpass its giant retail business, Leo Kelion emphasises that competition from the likes of Microsoft, Google, IBM, salesforce and rackspace is significant. According to Synergy Research, Microsoft currently counts for 10% of the rest of the market for cloud services, with IBM coming in at a close third with 7%. Forbes pointed out this week that that “IBM cloud services is now a $7.7 billion business growing at 755” – not exactly a paltry offering.

Amazon, IBM, and the growing number of smaller, niche cloud providers are all very different beasts; but what is clear is that cloud services are continuing to enjoy significant growth, whilst IaaS users are continuing to enjoy the boon of on-demand services for their applications and websites.