AWS Rules Cloud Services Roost
Amazon Web Services dominates the cloud infrastructure services market, owning a bigger share than all its largest competitors combined.
AWS holds 29 percent of the market, according to a new report by Synergy Research Group. The company also is growing faster than the overall market, although it was not the fastest growing business in the first quarter of 2015, Synergy found. That honor went to Microsoft, whose revenue increased 96 percent, followed by Google, which grew 74 percent in total cloud infrastructure revenue last quarter. IBM's revenue in this sector increased 56 percent, followed by Salesforce at 34 percent, according to Synergy.
All told, cloud infrastructure revenue – including Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), private, and hybrid cloud – added up to more than $5 billion for the first three months of the year, Synergy estimated.
"Across the full and varied spectrum of cloud activities there are now six companies that can lay a valid claim to having annual cloud revenue run rates in excess of $5 billion – AWS, IBM, Microsoft, HP, Cisco and Salesforce – and all are able to claim leadership in different parts of the cloud market," said John Dinsdale, a chief analyst and research director at Synergy. "However, on a strict like-for-like basis AWS remains streets ahead of the competition in cloud infrastructure services. Furthermore, this part of the cloud market is growing much more rapidly than SaaS or cloud infrastructure hardware and software."
Annual cloud infrastructure revenue totals more than $17 billion and is growing at about 45 percent yearly, the research firm said.
Amazon has continued to invest in AWS, both within its datacenters' technologies and its offerings to clients. Earlier this month, for example, it began offering Amazon Machine Learning, a managed service that uses historical data to help developers build and deploy predictive models for tasks such as detecting problematic transactions and improving customer support. In November, the company unveiled its Amazon EC2 Container Service designed to simplify how businesses run and manage distributed applications using containers on AWS.
Microsoft's explosive growth comes on the heels of refocusing its products and services on cloud. In its most recent earnings report, released April 23, Microsoft reported 106 percent increase in commercial cloud services, which includes Office 365, Microsoft Azure, and Dynamics CRM.
"Microsoft’s Windows Server division is one of the fastest growing divisions of Microsoft. During Q3 FY15, server products and services revenue grew by 10%, driven primarily by 25% growth in Microsoft SQL Server. Furthermore, adoption of the cloud-based Azure platform also increased, and Dynamic CRM is a business in excess of $2 billion," according to Trefis.com. "As a result of these products, its cloud revenue run rate exceeded $6.3 billion. We’re encouraged by the continual growth that this division posted, and it is becoming an important driver for Microsoft’s value."
The Redmond, Wash.-based developer also is expanding its relationships with high-end solution providers such as EY, to vie against other cloud service providers in sophisticated enterprise accounts.
Google continued to compete against Amazon on price but also began emphasizing its performance by enhanced capabilities and partnerships with familiar enterprise brands such as VMware. This month, for example, Google compared its solid state disk storage to AWS' offering by both performance and price. Google also uses customization and scale as differentiators.
"Because SSD is available on all of our primary instances, you can easily configure a much smaller instance type and still keep the power of local SSD. Let’s go down to the smallest three-node configurations we can get on each provider that still give us access to full performance SSD. For us, that’d be n1-standard-1 instances with 1x375GB local SSD, for AWS that’d be i2.xlarge instances with 1x800GB local SSD," said Miles Ward, global head of solutions for Google Cloud Platform.
In its most recent quarter, IBM's cloud revenue grew 75 percent year over year to $7.7 billion, said Martin Schroeter, IBM’s senior vice president and Chief Financial Officer.
"This is a demonstration of high growth in the higher-value cloud opportunities across public, private and hybrid. We had terrific performance in our cloud foundational and as-a-Service offerings. And we exited the quarter with an annual as-a-Service run rate of $3.8 billion, that’s up a billion and a half in the last year," he said during the earnings call. "The bulk of that growth was organic, the result of our deep insights into how our clients run their business. We’ve applied that insight to develop a strong point of view on cloud, that the value in cloud is hybrid. In February, we announced a program to make hybrid cloud a reality for the enterprise, extending our clients’ control, visibility, security and governance in a hybrid cloud environment, similar to what they have in their private cloud and existing IT systems."