Everyone is suddenly seeing gold in cloud infrastructure market

Posted by Ron Miller on Aug 24, 2016 12:10:17 PM

5817618029_07fe8a2038_z-1.jpgCount Chinese software company Kingsoft as the latest organization, boldly believing it can grab a chunk of the cloud infrastructure market. Who can blame them when there's clearly big money there.

Kingsoft wants to stick to China for now, but even there, it's going to run into some stiff competition. Bloomberg reports that Kingsoft CEO Hongjiang Zhang sees a big market and does not appear to be intimidated by bigger, more well-heeled players like Alibaba.

"In gaming and video cloud and healthcare, we are the leader, so I’m quite confident we will have our place and we’re gaining market share while increasing revenue," Zhang told Bloomberg. He admits he's a long way from breaking even, but in his view that's true of every player in China, where for now, it's about establishing your market presence.

Still, it seems foolhardy when even mighty Alibaba hasn't created a blip in a market dominated by AWS, Microsoft, Google and IBM. In fact, according to recent data from Synergy Research, among them, the big four control over 50  percent of the market. Of that AWS has over 30 percent.

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The remaining number is split among a variety of vendors from Albibaba to Rackspace to Oracle and telcos. Synergy even includes Salesforce in this bunch, although I'm not sure why a SaaS company with $8 billion run rate is part of this round-up.

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The big growth as you might imagine is among the largest players with Google at around 4 percent market share growing the biggest amount at 162 percent. Before you get too excited about that number, remember that it's a lot easier to grow a big number from a small amount of market share than it is to grow a big number from a bigger chunk of market share. Even with its substantial market share lead, AWS grew 53 percent in Q2, while Microsoft grew 100 percent and IBM 57 percent, according to Synergy's numbers.

Of the remainder, all of the also-rans combined gained 41 percent.

A numbers game

It's a tough game for anyone to enter, so perhaps Kingsoft's brave words belie the reality that even those US companies who lead the market by so much also have worldwide presence, making it a huge challenge for Kingfish or any of the lower tier players to gain market share anywhere, even on their home turf.

Never say never, but even as Kingfish and Alibaba attempt to attack the Chinese market (and one would presume eventually a wider world market), the market leader, AWS, could be in a pivot that could leave these newer players scratching their heads.

In this new market, according to a recent ZDNet article, AWS will be selling a set of distinct services instead of simply time on a server. As an example, last year AWS announced Lambda, an event-driven tool that only charges the user, based on an event trigger, instead of a constant charge for server time, even when it's not really in use.

It's likely of course that if one company pivots, the other will eventually as well, but with a 10-year head-start and oodles of marketshare, it's going to be tough for new entries to make a dent. Kingsoft thinks it can beat the odds. It certainly has its work cut out for it.

Intronis blog
Photo Credit: Damien Pollet on Flickr. Used under CC by SA 2.0 license.

Topics: Cloud Trends

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