The end of the Q3 2017 earnings season highlighted the continued importance of cloud computing for the four largest global cloud providers by market share.
Alphabet, Amazon, IBM, and Microsoft each saw growth in their cloud computing businesses, driving a 40% year-over-year (YoY) increase in cloud infrastructure service revenue, according to Synergy Research.
Here’s an overview of how the four tech giants’ cloud businesses performed, as each fights to grab a larger share of the cloud market:
- Amazon Web Services (AWS) is in a league of its own. Despite showing signs of slowing down, AWS thrived during Q3 2017, posting 44% YoY revenue growth, to reach $4.6 billion. And while that’s down from 54% YoY growth in the year prior, the company still managed to increase its share of the global cloud market, remaining larger overall than the next five largest cloud competitors, according to Synergy Research.
- Microsoft’s cloud business maintains its stellar growth rate. Revenue from Microsoft’s Intelligent Cloud segment, which houses Azure, increased 14% YoY during Q3, to reach $7 billion. Azure revenue, which jumped 90% YoY, drove much of this growth. This positive performance is largely responsible for Microsoft’s ability to hold onto its second-place position in the global cloud market.
- IBM’s cloud computing business was a bright spot during the quarter. While the company’s total revenue fell short in terms of YoY growth, cloud computing revenue advanced 20% YoY in Q3, to reach $4 billion and coming in just shy of $16 billion for the trailing 12 months. IBM’s strong name in hybrid cloud solutions — a combination of private and public cloud offerings — has helped the company hold onto its third-place position behind Amazon and Microsoft, but ahead of Google.
- Alphabet’s cloud business trails the leading three in market share. Cloud is one of the fastest-growing businesses across Alphabet. While the company doesn’t break out specific revenue for its Google Cloud Platform (GCP), its “Google other revenues” segment, which includes Google cloud, grew 49% YoY in Q3, to reach $3.4 billion. That’s up from 39% YoY growth reported in the year prior. The company’s cloud business also managed to show gains in the global market, Synergy Research notes.
These companies’ investments in artificial intelligence (AI) and machine learning (ML) will be integral to driving the future of cloud computing. Though nascent, AI and ML are anticipated to shape future cloud-based enterprise solutions. Already, the big four cloud giants are infusing their products and platforms with the power of AI. For instance, Amazon leverages its extensive AI offerings — such as natural language programming (NLP) for chatbots being used by retailers — as value-adds for its cloud customers.
Cloud computing — on-demand, internet-based computing services — has been successfully applied to many computing functions in recent years. From consumer-facing, web-based productivity apps like Google Docs to enterprise database management suites, the tools businesses rely on are increasingly moving to the cloud.
But developing a cloud strategy is no easy task. Public cloud solutions will likely come to dominate the market over the next decade, but business constraints, such as security concerns and the limitations of existing infrastructure, make it difficult for companies to fully adopt the public cloud right now.
That means that hybrid clouds, in which multiple cloud implementations (including public and private) are connected, will remain popular for the time being, at least until these constraints are addressed. The tech giants that dominate the IaaS market — Amazon, IBM, Microsoft, and Google — are constantly expanding their offerings to address current business constraints as they compete for market share.
- Explains the different cloud computing strategies and benefits of cloud computing.
- Evaluates key business considerations – security needs, demand predictability, existing infrastructure, and maintenance capabilities – for enterprises choosing between cloud implementations.
- Provides and outlook for trends and major players in the cloud computing market.