Public Cloud Battle: Here's How AWS, Microsoft And Google Stack Up After Robust Earnings Calls
Who Has The Edge?
The three leading public cloud providers -- Amazon, Microsoft and Google -- all released earnings figures last week that seemed to sprawling businesses buoy investor confidence.
The three rivals are locked in a heated battle to control the public cloud, a market that's exploding at an almost 50 percent growth rate. Sales for Infrastructure-as-a-Service, Platform-as-a-Service and hosted private cloud are approaching $10 billion in quarterly revenue, according to a recent analysis by Synergy Research.
In the concurrent earnings calls for the quarter ending March 31, Microsoft CEO Satya Nadella, Google CEO Sundar Pichai and Amazon CFO Brian Olsavsky each extolled the capabilities of their respective cloud offerings.
But it's worth noting that the Big 3, as they've come to be known, aren't the only players left standing in the industry. While IBM's recent earnings call certainly didn't generate the same kind of enthusiasm on Wall Street, Big Blue has a strong share of the market Synergy evaluated due to its private cloud hosting business. Oracle and Alibaba are also growing fast and trying to make inroads.
Google finally looks to have its enterprise growth strategy nailed down, and the right team in place backing cloud chief Diane Greene's transformative vision.
Google Cloud Platform is consistently posting triple-digit growth – GCP again exceeded 100 percent year-over-year revenue expansion in the last quarter, according to Synergy Research.
Enterprise customers are now looking to Google Cloud for mission-critical projects and full migrations, including moving data from on-premises data centers to the cloud, Google CEO Sundar Pichai told investors in the company's earnings call.
That success has generated the highest growth in headcount and capital expense of all parent Alphabet's businesses, Pichai said.
Google is now providing the "heavy lifting" that helps meet enterprise IT requirements, Pichai said, thanks to Greene having built world-class sales, marketing and engineering teams.
Ruth Porat, Alphabet's CFO, told investors on the call that Google Cloud is one of the fastest-growing Alphabet businesses. But Google can still only claim five percent of the overall infrastructure hosting market. While the Internet giant is the third-largest public provider, IBM holds larger share in that category -- roughly 8 percent -- when counting its base of private cloud customers, according to Synergy Research.
Microsoft
Microsoft has long maintained rapid growth in its Azure business, but the software giant's cloud market share gains are coming at the expense of smaller players, and not doing much to chip away at Amazon's first-mover lead.
Once again achieving better than 90 percent year-over-year expansion in the last quarter -- something Microsoft has done consistently in recent years -- does keep the pressure on Amazon Web Services, and makes up for anemic growth in Microsoft's on-premises server business.
Microsoft Azure now owns 10 percent of the overall market for public cloud and hosted private cloud infrastructure, according to Synergy Research.
"The driver of a lot of it is net new" demand such as Internet of Things workloads, Microsoft CEO Satya Nadella said during the company's earnings call. "IoT was not a workload on the old server world."
Amazon Web Services
AWS is larger than the next five cloud infrastructure providers combined. The pioneering cloud vendor maintains its hold on roughly one-third of the global cloud market, according to Synergy Research.
"The law of large numbers almost dictates that AWS growth rate has to moderate," said John Dinsdale, Synergy's chief analyst.
In fact, Amazon's 43 percent growth over the last quarter only kept pace with the market as a whole. Given its existing size, however, that "moderate" rate converts to more overall revenue gain than any other provider and allows the industry's leader to maintain its perch atop the cloud.
Amazon CFO Brian Olsavsky noted in the earnings call the last quarter saw Amazon's cloud business attempt to penetrate new markets with two high-profile products: Amazon Connect, a contact center solution; and Chime, a new collaboration service.
And following a year in which AWS introduced more than 1,000 new cloud features and services, the "innovation pace continues to accelerate," Olsavsky said.
Challengers
Oracle was a late entrant to the infrastructure services market, but the business software giant has been making noises over the last year about a concerted push into public cloud. There might be signs of success on that front -- Oracle's sales grew in the last quarter well above 50 percent.
Oracle now matches Chinese e-commerce powerhouse Alibaba, which grew its cloud business roughly 75 percent in the last quarter, with 3 percent market share in cloud infrastructure, according to Synergy Research.
And while IBM's latest earnings call had the opposite effect on the company's stock from those of the Big 3, with shares tumbling after its 20th straight quarterly revenue decline, Big Blue maintains eight percent market share due to its strong business hosting private clouds for enterprise clients.
Synergy Research also described Salesforce and Rackspace, both growing slower than the overall market, as "strong niche players" in the infrastructure services market.