Microsoft Growing Explosively, but Amazon Retains Huge Cloud Lead

Mitch Wagner
10/31/2017

Microsoft is the fastest-growing of the four big US cloud service providers, with revenue up 90% year-over-year in the third quarter. But Amazon Web Services still commands more of the market than the next five-biggest players, according to market research.

While Microsoft Corp. (Nasdaq: MSFT) is the fastest-growing cloud provider, Amazon Web Services Inc. and Google (Nasdaq: GOOG) are doing very well too -- up 42% and 76%, respectively. IBM also gained – but not a lot, according to recent research from Canalys.

Microsoft, Google and Alibaba are all growing their revenues faster than Amazon and are gaining market share as of the third quarter, according to a report from Synergy Research Group.

IBM is the third largest cloud provider, due primarily to strong leadership in hosted private cloud, according to Synergy.

Of the rest of the top eight cloud providers, Oracle is growing strongly, but from a small base, and Salesforce and Rackspace "maintain a strong position in specific niche segments," Synergy says.

The Canalys and Synergy reports follow most major operators releasing their most recent quarterly earnings last week. (See For Amazon & Microsoft, the Cloud Keeps Giving.)

Synergy estimates quarterly cloud infrastructure revenues, including infrastructure, platform, and hosted private cloud, have now reached $12 billion, and are growing at more than 40% per year. That's similar to Canalys's findings of 43% growth on a $14.4 billion market.

"While we forecast 40% growth in the total market for 2017, there's still something a little shocking about seeing a business unit the size of AWS consistently growing its revenues by over 40%," said John Dinsdale, a chief analyst and research director at Synergy Research Group, in a statement. "Microsoft and Google too deserve plaudits for the growth rates they are achieving, while IBM is gaining market share in its sweet spot of hosted private cloud services. It is becoming increasingly difficult for cloud providers outside of the leading pack to make an impression on the market share rankings."

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— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Follow me on Facebook Editor, Enterprise Cloud News

Home page photo by Student150 (Own work) [CC BY-SA 4.0], via Wikimedia Commons

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Michelle
Michelle
11/28/2017 | 1:47:09 PM
Re: Market development
While the Edge browser is an improvement over past iterations of IE, it still has a lot of room to improve. I think the Surface has been a star for the office like XBox was for gaming. Capitalizing on current success will be good for them, though I often don't agree with the way they go about it...
kq4ym
kq4ym
11/27/2017 | 7:57:53 AM
Re: Market development
And it may be interesting to see how Microsoft will move with it's newer products like it's browser and Surface. While they'll certainly have to get growing with the cloud, those other services wlll add to their bottom line and brand.
kq4ym
kq4ym
11/14/2017 | 10:28:10 AM
Re: Market development
It might be interesting to project if and when Microsoft, IBM, and Google could overtake an Amazon lead, using some conservative growth numbers. Maybe there no way to acheive that at all unless Amazon does something amazingly stupid?
Ariella
Ariella
11/2/2017 | 3:02:28 PM
Re: Market development
@Michelle I get the sense it's more of a help to the seller, not just in terms of bigger gains long term but also in making the initial outlay to the prospect smaller, which makes the contract appear more attractive than a huge expenditure at one shot. When I interview vendors now, I usually ask them about their fees, and generally the answer is that they use a subscription model.
Michelle
Michelle
11/2/2017 | 2:04:39 PM
Re: Market development
Yes, indeed. Now almost everything is going to the subscription model. I'm not sure it's right for every industry, but I see a lot of it.
Ariella
Ariella
11/1/2017 | 1:23:24 PM
Re: Market development
@Michelle yes, though they seemed to have modified their business model in terms of the software. It used to be that when you bought a PC you'd get the software to use as long as you had it. Now they use the subscription model instead.
Michelle
Michelle
10/31/2017 | 11:18:20 PM
Re: Market development
Whenever I see innovation like this I think back to poor old Microsoft before the Surface. They had a stronghold on the PC market, then no traction in mobile. Innovation is refreshing.
maryam@impact
[email protected]
10/31/2017 | 11:01:15 PM
Re: Market development
Daniel, exactly it demonstrates that even with a proven market leader a company can still engage in a market and gain share if their strategy and focus are constant.
danielcawrey
danielcawrey
10/31/2017 | 2:56:18 PM
Re: Market development
Really smart move for Microsoft to hyperfocus on cloud. The leadership there simply knew that the cloud business was going to destroy them if they didn't do something about it. And look at the results - a resurgence. 
maryam@impact
[email protected]
10/31/2017 | 11:11:10 AM
Market development
Amazon's growth rate is strategic but I wouldn't write off Microsoft or Google both are making great inroads in the market. Eventually, there will be a market shake out as it matures but right now the demand is high and the providers are all vying for the best value proposition.
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