Cloud computing has been the talk of the IT market over several years now. The COVID-19 pandemic accelerated its usage, enabling remote work. In the midst of the rest of the world adapting to cloud computing, three vendors have emerged as the market leaders.
As on today, — Google, Microsoft Azure and Amazon — control over 50% of the IaaS market. Their high adaptability and continuous innovation has them rooted in their top positions while simultaneously capitalizing on emerging opportunities.
The advent of 5G technologies paired with new approaches to hybrid cloud as viewed as opportunities by each vendor. The article discusses what the 3 giants need to do in order to strengthen their cloud market positions while winning customers.
Cloud revenue drivers and current standings
These companies find their major source of revenue in the IaaS market. These companies have recognized the potential and thus invested over $30 billion in the second quarter of 2020 on cloud infrastructure alone says Synergy Research. AWS controlled a whopping 33% of the market share, while Microsoft and Google have held 18% and 9%, respectively.
Almost two-thirds of today’s cloud revenues come from web companies. A majority of the cloud users are content providers like internet startups, social media platforms and not to forget OTT media service providers like Netflix and YouTube. Enterprises have been more conservative in adopting cloud computing as an infrastructure option, as their requirements are very different due to strict compliance regulations.
Compared to internet startups, enterprises are still conservative in their approach and thus have adopted public cloud resources to host only front end which connect to their pre-existing, on-premises resources at back end. It is very unlikely that enterprise usage will be able to generate major cloud revenues. This is seen is a huge opportunity for vendors to enhance their cloud market share.
Though AWS controlled around 33% of the cloud market share, when it comes to revenue from enterprises, Microsoft Azure beats them by large numbers. Microsoft is followed by AWS and then closely by Google. Though Amazon attributes over two-third’s of its cloud revenues to web companies, AWS has a major share in the overall cloud market. This definitely puts them in second place with respect to cloud revenues from enterprise customers.
Cloud market share and strategy breakdown
In recent times, there has been a major change in how enterprises are accepting and adapting to cloud usage and hybrid cloud. This has caused a major shift in cloud market shares. Microsoft’s share declined in second quarter earnings, yet has held the top position at 47%. Meanwhile, Amazon’s revenue growth rate declined to 29%. This only means that Google has gained the most here.
Each of the players are now focused strategizing to address the rising demand for hybrid cloud.
AWS Amazon has a two-pronged Cloud and Container hybrid approach. It has agreements with vendor like VMware in particular to expand data centre hosting to the cloud. It also sells AWS Outposts (hardware and software systems), which host Amazon’s cloud storage, APIs, and software on premises.
Amazon needs to approach the versatile front end more specifically on AWS for the current rear end model. Many enterprise users do not attempt to transfer data centre components into the cloud – or vice versa. They want an agile cloud front end that empowers employees and customers and manages the merged application as well as a single collection of resources. Microsoft has now the potential to support this model, while Google is in the process of implementing it.
Google Cloud – Google must also focus on promoting the hybrid cloud model for businesses. The businesses tend to take a longer view, specifically focusing their services and technology on the cloud-native application model. Moreover, everyone wants native cloud; it is a tough term to define.
Google has cloud-born technology to propel. It needs to teach developers and CIOs about using cloud-native designs in a hybrid model in the cloud. Google started to go in that direction with Anthos, its hybrid cloud services that rely on the federation of Kubernetes. In addition, Google has Istio for service mesh and the open source functional programming platform Knative as the framework for cloud-native deployment.
Microsoft Azure – Microsoft has more data centre relationships to revert to business cloud customers, but it is not sitting idly in the face of this front-end / back-end hybrid cloud trend. The newest salvo in the cloud market is the Open Source Mesh. Open Service Mesh offers a cloud-native open source application mesh for Microsoft to handle micro services in various environments.
It indicates that Microsoft takes hybrid cloud seriously and will not pursue the path adopted by Google towards Istio. Microsoft also has Anthos competitor with Azure Arc that manages hybrid and multi-clouded server or container environments.
In addition to enterprise adopters, Microsoft is also gaining market share through a new cloud revenue resource, which is 5G virtualization, and carrier cloud plans by network operators.
5G cloud networks offer space for growth
It has been observed that the mobile operators as well as other network operators across the world are looking at switching to virtual functions hosted in the public cloud platforms as compared to their proprietary devices or even their own clouds.. It looks like, 5G will emerge to be the largest of the cloud-native opportunities.
This has brought about fierce competition amongst the three cloud providers. They are rolling out irrefutable offers. AWS concentrated on the densely populated areas by rolling out its Wavelength Zones to the users. It appears that these zones are hosted in data centers owned by successful network carriers such as Verizon. Google teamed up with AT&T for 5G and has added Anthos for Telecoms, which serves the platform to network-centric apps. Microsoft has also partnered with AT&T and there are plans to add to its own 5G capabilities with Azure Edge Zones.
Microsoft has further started acquiring companies like Metaswitch Networks, which provide cloud-native implementations of 5G Core functions. It could gain massive market share in this avenue, if it manages to exploit its investment in 5G features quickly. This could mean that soon Azure will be ready for the adoption of enterprise hybrid cloud platform.
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