on a ladder, reaching for the clouds
With Amazon, Microsoft and Google all competing for cloud space it seems unlikely anyone else can compete. PHOTO: Samuel Zeller

Little (if anything) can stop the evolution and growth of the cloud business. With hybrid clouds shaping up to be the flavor of the year in 2018, we turn now to who the leaders in the cloud computing world are and will be for the foreseeable future.

In spite of some jostling in the space, the leadership board for cloud services and infrastructure as a service (IaaS) will likely remain unchanged: AWS leads, followed by Microsoft, followed by Google.

There is also some light on the horizon for Armonk, New York-based IBM. Barclays bank upgraded the status of IBM’s shares on Jan. 16 and pushed their price target to $199 from $133 saying that “a new dawn emerges” for Big Blue. 

The statement, which was carried by MarketWatch, cited Barclays analyst Mark Moskowitz: 

“We think that IBM could emerge as the next important cloud vendor after Amazon and Azure over time as customers seek a multi-cloud strategy to avoid vendor lock-in or technology complacency. IBM’s initiatives with both blockchain and analytics could help the company become a more competitive vendor for certain cloud workloads.”

AWS, Microsoft, Google Jostle for Cloud Position

The cloud market is tight and any change in rankings will take a lot of work. KeyBanc analysts, cited on CNBC, report that AWS finished the fourth quarter with 62 percent cloud market share, down from 68 percent a year earlier, while Microsoft continued to gain momentum. As it currently stands: 

  • Amazon has 62 percent of the market (down from 68 percent).
  • Azure jumped to 20 percent (from 16 percent).
  • Google's share increased to 12 percent (from 10 percent).

Could things change over the next five years? It seems unlikely but not impossible. In 2015, Gartner predicted that, globally, enterprises would spend $140 billion on on-premises data center systems. Since then, the rapid adoption of public and private cloud services has sparked a major reallocation of IT budgets. The result, according to IDC, is that cloud services and infrastructure spending will reach $266 billion annually by 2021.

3 Cloud Vendors, Similar Cloud Services

Brian Peterson is VP of Engineering at San Francisco-based Dialpad, where he led the company’s integration with Amazon Alexa. He also was a senior software engineer at Mountain View, Calif.-based Google between 2002 to 2010.

Peterson believes that the next five years will show that no one company will dominate the cloud. Cloud computing, and to a degree artificial intelligence (AI), will become mostly a commodity where companies pick the cheapest option.

This will be great for consumers, he argues, because having multiple dependable cloud providers means that competition will ensure that the rates remain low. Even today it’s to the point where everyone offers almost the same services.

“Google, Amazon and Redmond, Wash.- based Microsoft all provide similar services, and for the most part users are picking one based on their previous experience as well as on incentives those providers give. Incentives can be things like get X free credits to use our platform, or Y free years of service if you are a start-up,” he said. “That all being said, all major providers need to continue to invest in this area because there is so much money to be made. And actually, there’s so much money at stake, that there doesn't need to be one clear winner for everyone to make out well.”

Ultimately, this means the market will continue to explode, but Google, Seattle-based Amazon and Microsoft have so much leverage in their areas it will be impossible for one to break out too far from the other in the long term. “Right now Google and Microsoft are behind Amazon, but just because they had a late start. With Google and Microsoft's control on businesses/enterprises, my hunch is that they will quickly catch up to Amazon and stay competitive,” Peterson added.

The AI Factor

In an effort to differentiate itself, Google has made a huge investment in developing and marketing the machine learning and big data capabilities of its platform. Google's high-profile acquisition of AI innovator DeepMind for $500 million in 2014 and its support for the open source deep learning project TensorFlow, has arguably cemented Google as the cloud AI leader. But this success hasn’t been enough to narrow the market share gap.

“The problem is that data scientists don't cut big checks to cloud providers: IT departments and developers do,” said Jake Bennett, CTO of POP a Seattle-based digital experience design agency. “The future would look brighter for Google if it was competing on AI against machine learning newbies — but it's not. Amazon is a pioneer in the use of machine learning at scale, having used personalization and smart recommendations to grow its ecommerce business for decades."

He added that although Google Cloud Platform may have more depth in AI than Amazon Web Services, it lacks Amazon's mammoth range of bread-and-butter cloud services, and Microsoft's network of enterprise relationships. AI might be a nonstop topic of conversation in the press, but there isn't enough of it in the enterprise, yet, to move the needle for Google.

Meanwhile, Microsoft has already been investing in the AI capabilities of its platform, Azure, to narrow its gap with Amazon. Azure has been building an array of easy-to-use data science tools designed to make life easier for data scientists and to convert regular developers into machine learning engineers.

In addition, Microsoft has cultivated a huge brain trust. Its R&D group, Microsoft Research, employs over 1,000 researchers, a significant number of whom are focused on AI innovation.

“Given Amazon and Microsoft's existing lead and growing AI capabilities, it's unlikely that AI will be the thing that narrows the gap for Google. And if Google can't differentiate their product offering through AI the only thing left for them to compete on is price,” Bennet concluded.

Operating in a Multi-Cloud World

Jeremy Vance, VP of Technology at St. Louis-based US Cloud said that for many enterprises it doesn't really matter who comes out top as most enterprises work with two or even three of the vendors. That doesn’t leave a lot of room for anyone else, however.

“Amazon has been doing it the longest, they eat their own dogfood and utilize their own technologies, but cloud isn't necessarily their core business like it is for Microsoft,” Vance said. “Microsoft has a robust and mature offering, but the challenge of consumers who are averse to any Microsoft product. Google has that challenge as well, but Amazon seems to be more neutral. Google has a very clean and uncluttered offering that does everything that the others do."

According to Mountain View,Calif.-based Redis Labs' Manish Gupta, as a result, large enterprises will take the multi-cloud route in an effort to avoid cloud lock-in. “Large enterprises will make multi-cloud a strategic business imperative. Companies have been burnt by putting too much reliance on one vendor for multiple software needs. Having learnt that lesson, large enterprises are enterprises are wary of doing the same with cloud vendors like AWS.”