After the recent round of financial results, it is clear cloud computing is driving revenues in one way or another for many of the big tech companies. Recent releases in the market indicate that this is, indeed, the case.
Earlier this week, for example, Basking Ridge, N.J.-based Verizon announced the general release of an on-premises, private edge compute solution in partnership with Microsoft Azure. Verizon 5G Edge with Microsoft Azure Stack Edge is a cloud computing platform that enables computing and storage at the edge of the enterprise. Elsewhere this week, Germany-based SAP and Mountain View, Calif.-based Google deepened their partnership as part of Rise with SAP, the company's latest push to spur on S/4HANA migrations in what looks like an evolution of the public cloud hyperscaler market for SAP customers.
Top Cloud Providers: Amazon, Google and Microsoft
So it’s a typical week in the cloud industry. Amazon, Google and Microsoft are dominating the space and it seems unlikely that there is room for anyone else. In fact, data from the Synergy Research Group published in January shows that the total number of large data centers operated by hyperscale providers increased to 597 at the end of 2020, having more than doubled since the end of 2015.
It also showed that among the hyperscale operators, Amazon, Microsoft and Google collectively account for over half of all major data centers. Amazon and Google opened the newest data centers in the last 12 months, accounting for half of the 2020 additions, with Oracle, Microsoft, Alibaba and Facebook also being particularly active.
Hyperscale data centers are massive business-critical facilities designed to efficiently support robust, scalable applications and are often associated with big data-producing companies such as Google, Amazon, Facebook, IBM and Microsoft.
What Are the Cloud Market Options?
The result of this ongoing positioning in the cloud market means that many businesses have treated Amazon and Microsoft as the only options as they look to embrace cloud computing. However, there is growing evidence to suggest that IT and tech vendors are looking around for alternatives. In fact, looking at the data from alt-date research companies like Stackline, the current state of the "Cloud Wars" shows a renewed 2021 flow, with as much as 8% growth forecasted, after an ebb of 5% reduction in budget allocation for cloud in 2020.
As global business finds its footing in remote and hybrid decentralized work — with about 60% still predominantly remote, and over 30% in a hybrid model since March 2020 - the new cloud infrastructure supporting this work model has also brought with it new cybersecurity threats, especially with the rise in the number of co-located teams, said New York City-based Elizabeth Hunker, an advisor on tech start-ups that has worked with HyperVerge and DecentraNET.
The question, however, is whether the distribution is equal across all players? Obviously not. Those benefiting the most from this growth seem to be those with the strongest security offered within their enterprise cloud stack. With AWS maintaining a 50% incumbent ownership status in the cloud, Azure looks to be holding in second position at just over 30%, followed by Alibaba and GCP sharing nearly 17% of all cloud adopters evenly between them.
Among the four, AWS was the only to see recent growth, as a decentralizing trend disintermediates a historically monolithic enterprise landscape. Given the relative explosion in demand for cloud-first architecture skillsets, there's been a tandem climb in the IT service and consulting industries, buoying market leaders like Accenture, Oracle, Juniper, Teradata and Coupa.
“Where Fortune 1000 players have historically chosen between enterprise monoliths who happen to offer cloud computing and services, we're now seeing microservices that offer specialization and agility like never before,” Hunker said. “With liquidity expansions and rising popularity in SPACS, SPARCS and IPOs, a space that seemed to be contracting via M&A without halt is showing renewed independence.”
She pointed out that some of the biggest gainers in 2021 include players in information security, robotic process automation and managed data, like Snowflake, UiPath & Splunk.
Although Microsoft Azure and Amazon Web Services still dominate the market, other players are gaining traction. Google Cloud Platform is an attractive choice for IT managers interested in its big data and analytics workloads.
A Place for Other Cloud Providers
Meanwhile, hybrid cloud and traditional data center providers such as IBM, Hewlett-Packard and VMware also have their place, said Brad Touesnard, founder and CEO of Canada-based SpinupWP. Salesforce and ServiceNow are using their back-to-work enablement suites to establish themselves as major platforms.
It all comes down to one thing: The battle is being fought over data acquisition. Major players know that the more corporate data that resides in the cloud the more loyal the customer. Cloud computing vendors are pitching enterprises to use their data storage platforms for everything from analytics to personalized experiences.
Key differentiators for discerning IT managers here, he said, will be artificial intelligence, IoT, analytics and edge computing. Other important factors are the provision of serverless and managed services. Cloud vendors including Google Cloud Platform, AWS and Hewlett-Packard are seeking to entice customers by offering management layers to manage their other properties.
Which Cloud Providers Are Making Infrastructure Investments
The dominance of AWS and Microsoft Azure in cloud infrastructure cannot be understated. However, there are several other companies investing in their infrastructure business to make the space truly competitive, so that business owners have more choice over their providers, said Phil Strazzulla of Cambridge, Mass.-based Select Software Reviews.
He points to IBM as one of those companies that was fairly quiet on the cloud front for a long time, but has been consistently investing and building its services to the point where Watson is a viable product for businesses. These days, IBM/Watson are perfect solutions for companies looking to expand their data engineering potential.
Similarly, while many companies like Microsoft and Amazon are focusing on expanding cloud computing offerings, Google is looking to the future and building a quantum computing service that’s already outpacing competitors. As it stands right now, Google will be the first to a viable quantum computing option that will be in much higher demand than machine learning or AI solutions.
As trends in the business seem to migrate towards a la carte computing options, Azure seems to be trying to keep everything under one label. "Azure Synapse Analytics works only with the Azure architecture, and can make it challenging for businesses to employ too many different cloud systems." Strazzulla said. "As the segment becomes more competitive, we might see more companies opting for these exclusionary practices designed to keep people exclusive to their platform."
There's Room for Competition
In a recent blog post, Ian Campbell, CEO of Nucleus Research, wrote about how Microsoft won the $10 billion U.S. Department of Defense (DoD) Jedi cloud contract only to have political pressure bring AWS back into the picture. While it now looks like the contract will be split between the two companies, Campbell suggests that DoD should also consider IBM. The DoD is only considering Microsoft and AWS because they were the only two to satisfy all the certification requirements, which is a silly way to measure in Campbell's thinking.
"In this rapidly changing technology environment what is missing today is available tomorrow and obsolete the day after," he wrote. "Better to choose the partner than a snapshot feature list. Especially if you are making a 5- or 10-year decision."
The way is open for other contenders, but for the time being the field is dominated by AWS, Microsoft and, to a lesser extent, Google. It will take quite some time before others can gain ground.