Amazon & Other 'Big 4' Cloud Providers Crushing Competitors

Mitch Wagner
4/29/2016

Microsoft, IBM and Google are starting to close the cloud infrastructure gap, but Amazon is still light-years ahead of everybody else in terms of market share, according to recent research.

Synergy Research, which tracks infrastructure cloud market share, released its Q1 report Thursday and found that Amazon.com Inc. (Nasdaq: AMZN) alone has a 31% worldwide market share. Its three largest followers -- Microsoft Corp. (Nasdaq: MSFT), IBM Corp. (NYSE: IBM) and Google (Nasdaq: GOOG) -- have 22% of the market combined.

The next 20 top-ranked cloud providers account for 27% market share.

But Microsoft and Google are growing fast, with growth rates well over 100%. So they're gaining ground, says Synergy. The next 20 cloud providers are growing at an average 41% per year -- which is fantastic growth -- but they're losing ground, as the overall market is growing over 50%.

Crushing It
Source: Synergy Research
Source: Synergy Research

Quarterly cloud infrastructure service revenues for providers "have now comfortably passed the $7 billion milestone," Synergy says. That includes IaaS, PaaS and private and hybrid cloud. The US accounts for half the worldwide market, with growth rates similar across regions.

"This is a market that is so big and is growing so rapidly that companies can be growing by 10-30% per year and might feel good about themselves and yet they'd still be losing market share," John Dinsdale, chief analyst and research director at Synergy Research Group, said in a statement. "The big question for them is whether or not they are building a sustainable and profitable business. This can be done by focusing on specific regions or specific services, but the bulk of the market demands huge scale, a broad footprint, very deep pockets and a long-term corporate focus."

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Mitch Wagner
Mitch Wagner
5/4/2016 | 1:06:01 PM
Re: Closing the Gap?
Thanks, CEOandCh4656 (even though you have now outed your real name. Heh.). I'll look into it. 

As for Microsoft counting Office 365 as cloud revenue – why shouldn't they? It's SaaS.
CEOandCh47536
CEOandCh47536
5/3/2016 | 5:57:46 PM
Re: Closing the Gap?
This is the problem with the cloud numbers. Everyone wants them to be big. Microsoft and IBM have a vested interest in inflating the cloud numbers. While Microsoft is reporting more than $5 billion in cloud revenue, most of it is just share-shift of Office and Exchange licenses to Office 365. IBM is counting a lot of hardware revenue being sold into private clouds as "cloud" revenue. Amazon is only cloud services, as they have no legacy hardware or software product to shift. 

Fortune did a good piece on this in January: http://fortune.com/2016/01/25/vendor-cloud-numbers-a-mystery/

I wrote a piece on it regarding the implications for the channel: http://the2112group.com/2016/01/cloud-success-requires-cultivating-cloud-partners/
Mitch Wagner
Mitch Wagner
5/3/2016 | 5:52:29 PM
Re: Closing the Gap?
Interesting! What other columns is the spending shifting from?
CEOandCh47536
CEOandCh47536
5/3/2016 | 5:48:42 PM
Re: Closing the Gap?
I don't take issue with you're reporting, but I do take issue with the source material. Synergy's previously published data on Amazon, Microsoft, Google and IBM growth, as noted below, shows Amazon growing with the others flat to down. If you really look at their true numbers, you'll find most of this revenue is shift from other revenue columns. It's a shell game

 
Mitch Wagner
Mitch Wagner
5/3/2016 | 5:46:41 PM
Re: Closing the Gap?
Exactly so. And the big question will be whether those other corporations can continue the pace of growth. Or find some other market where it can outcompete Amazon. 
CEOandCh47536
CEOandCh47536
5/3/2016 | 1:33:38 PM
Re: Closing the Gap?
So much easier to grow 100% from a smaller base than to grow 50% from a large base. 
Mitch Wagner
Mitch Wagner
5/3/2016 | 1:13:34 PM
Re: Closing the Gap?
They're growing faster than the market. As you point out, Amazon still has a huge lead. 
CEOandCh47536
CEOandCh47536
4/29/2016 | 5:54:32 PM
Double Checking Number
Just for fun, I checked Synergy Research's Numbers. While they didn't break out the Q1 numbers, they were kind enough to do it for Q4-2014 and Q4-2015. Guess what the results were?

Amazon +10.7%

Google -20%

Microsoft -10%

IBM - No Change

Methinks someone has a broken calculator-thingy. 
CEOandCh47536
CEOandCh47536
4/29/2016 | 5:35:56 PM
Closing the Gap?
I'm sorry, how are Microsoft, Google and IBM catching up to Amazon in the cloud? As you point out, Amazon has 31% market share. The three closest competitors have 22% combined. Disaggregate the three companies and, say, the each have about 7% share. Even at their current growth rate, and Amazon maintaining its growth rate, it would take a decade for one of the three to come close to overtaking Amazon.

Of course, anything can happen. Amazon could make monumental mistakes in their infrastructure, service execution, and go-to-market strategies. But it would take an equally monumental fall combined with a monumental leap by the three rivals to change the order of the public cloud market. 
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