To cloud commentators, discussions around relative market share and market share growth of the different vendors is the gift that just keeps on giving. Luckily for said commentators, every analyst firm has a different take on the relative growth trajectories of the vendors and since no two vendors measure the same (and certain vendors don’t break out their cloud business from other lines of business) there is no end of discussion points available.
New research from the Synergy Research Group adds another voice to the melee. The company recently published a report that found that in fact Microsoft and IBM are leading the cloud infrastructure market wars. Of course, given the massive incumbent advantage that Amazon Web Services has, this is something to be welcomed with woops of joy by the other players. In terms of their own credibility to opine on the topic, Synergy provides quarterly market tracking and segmentation data on IT- and Cloud-related markets, including vendor revenues by segment and by region. According to the company, market shares and forecasts are provided via their online database tool, which enables easy access to complex data sets. Take that for what it’s worth.
The bottom line is this. According to the findings, in the second quarter of this year, the total cloud infrastructure services market grew at a pace exceeding 45%. But in news that will be upsetting to one certain Seattle juggernaut, while pleasing to another one, Microsoft MSFT -0.07% and IBM IBM +1.26% have gained market share over the last four quarters, while the share of AWS and Google are unchanged from a year ago. Synergy estimates AWS’s growth rate has been cut in half in the past 12 months, while according to the research, IBM continues to see a cloud growth rate of + 50% in 2Q.
Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and private & hybrid cloud) have reached $3.7 billion, with trailing twelve-month revenues exceeding $13 billion. Synergy points out that total Amazon AWS revenues are now in excess of $1 billion per quarter, with nearly all of that coming from cloud infrastructure services. IBM and Microsoft also both claim quarterly cloud revenues of around $1 billion, but in their cases much of the cloud revenue comes from software/SaaS, cloud-related hardware products or associated professional and technical services.
Which is where, arguably, the problem lies. AWS earns their $1B mainly through infrastructure. They’re also rapidly moving up the stack. IBM and Microsoft earn a similar amount of revenue but they’re a full-stack provider. Logic therefore dictates that once AWS delivers a full-stack offering, their relative market share will grow accordingly.
Chief analyst at Synergy, John Dinsdale, doesn’t seem to agree, saying that:
It has become clear that AWS finally has some tough competition to face. Until this quarter it could claim that it was bigger than its four nearest competitors, but now at least one jewel has fallen from its crown. While it remains a formidable leader of the market, Microsoft is making some huge strides in IaaS and PaaS while IBM now has clear leadership in the private & hybrid infrastructure services segment.
John, John, John. You compared apples with kiwifruit and tried to extrapolate some meaning from that. It just doesn’t compute. AWS proponents could rightfully argue that once AWS goes full stack, its revenue will blossom. IBM and Microsoft backers could also rightfully argue that their strong position across the stack will hamper AWS’ ability to corner additional revenue streams.
The only thing clear in all of this is that there is little or no clarity. The bottom line however is that beyond the opining, it really doesn’t matter. Cloud isn’t a zero-sum game and all of these vendors, AWS, IBM, Google GOOGL +1.05% and Microsoft, will continue to grow and prosper off the back of a burgeoning market. A rising tide lifts all boats, remember?