The latest quarterly report on the cloud market from Synergy Research Group shows that Amazon Web Services is bigger than all its rivals combined. While the market continues to grow and each member of the pack has its special strengths, it's an AWS market share world, and everyone else is just playing along right now.
AWS currently owns about 29 percent of the market share. While the pack is making progress at catching up and the pie is increasing, AWS's lead is hard for any individual company to overcome, even for companies with the resources of Google, Microsoft, and IBM.
The interesting thing is that areas that have previously resisted the cloud, such as Europe and India, are beginning to open up to the idea. As that happens, the market will grow even more. Microsoft grew at a phenomenal 96 percent rate last quarter—almost double AWS—and it's likely it will continue to do well (especially if it can win a good part of the market in India).
If the industry rule of thumb holds, then only one or two companies can be big winners. It's fair to say that AWS is going to be one. It had what was essentially a seven-year headstart before anyone even started paying attention. As we learned last week when Amazon announced its AWS revenue publicly for the first time, Amazon's little side business with AWS is a $5 billion a year operation. That's some serious money.
Clearly Microsoft and IBM are trying to transition their companies via the cloud. Google is trying to transition to the infrastructure business as an adjunct to the rest of its cloud business. They each have strengths that appeal to the stragglers in the market who are late to the cloud.
To be honest, I'm not sure why the researchers include Salesforce in this survey, but they see the SFDC platform service as a competitor to the other offerings. I would like to see a chart that simply breaks down the infrastructure service. I'm guessing we would see even more separation between AWS and the rest of the players.
Microsoft's Bold Prediction
The question is can one of the companies other than AWS separate itself from the pack to become the clear second. If Satya Nadella has his way, he wants it to be Microsoft. At the Build conference this week, Nadella set the bar high. He is predicting that the Microsoft cloud business encompassing Azure and Office 365 for the enterprise will increase from the current $6.2 billion run rate to $18 billion by fiscal 2018.
That's a bold prediction on his part, and it would take a couple of factors to make it happen. Microsoft would need to make headway in new markets in India and Europe. It would have to continue to grow at the rate it did last quarter, and it would need a bit of luck.
It certainly shows the commitment that Microsoft is making to the cloud as it transitions from its Windows/Office core business, but it's not a slam dunk by any means.
For now, it remains all AWS in the cloud, and Amazon is not sitting still waiting for the competition to catch up. It is continually adding new services. Meanwhile the price for these services continues to plunge as the providers learn how to squeeze out ever greater efficiencies from their data centers.
If Microsoft can separate from the pack and become a clear number two, that would be a huge gain for the organization. If it could catch up and pass AWS, that would be incredible. For now, that remains in the realm of fantasy, and AWS remains the team to beat for some time to come.
Photo Credit: Jian Awe on Flickr. Used under CC by 2.0 license.