Who's Moving Ahead in Cloud Computing?
It's a given in the cloud computing business that Amazon Web Services (AWS) is the clear and undisputed market leader. Sure, the recent Amazon earnings report revealed a slowdown in the growth rate of its cloud revenue. But it's still growing robustly at 38 percent year over year, albeit down from the torrid 60 percent in the prior quarter. Clearly, AWS is the cloud vendor toward which every other vendor harbors great jealousy.
But being today's market leader might not matter much in the long term. The cloud market continually shifts and morphs. It’s still emerging technology. Many companies trust only a fraction of their infrastructure to the cloud, and plenty are just now moving to a major deployment. (Some companies wish it would all go away, given its new complexities and risks.)
Which Cloud Vendor is Gaining Ground?
So put aside AWS's overweening current market position, and instead look at what matters more: Which major cloud vendor is gaining the most ground, relative to its competitors?
That honor, in my view, goes to Microsoft. The Azure cloud platform is widely perceived to be in second place behind AWS, but it’s a strong second place. Microsoft claims some significant wins for Azure: 57% of Fortune 500 companies now use Azure; over 300,000 active websites; 13 billion authentications per week.
Microsoft's hybrid-friendly approach is in marked contrast to AWS's odd insistence on a public-only cloud stance. It's clear that in a world with wildly heterogeneous data centers, all clouds will be some version of hybrid, and that private cloud very much has a place in the future. So Microsoft is more flexible and more realistic in its approach to cloud. This will be a big plus as the months and years roll forward.
Microsoft has enterprise in its core DNA
One other hugely important advantage for Microsoft: it knows enterprise. Microsoft has been criticized – accurately so – for stumbling in some key areas, notably mobile. But even Microsoft's critics concede that Microsoft has enterprise in its core DNA. Its familiarity with enterprise is a major advantage over Amazon and Google. AWS has some big clients, but it's also benefited greatly from start-ups and app development work. Google has arguably even less simpatico with enterprise clients. It’s obviously the king of search and has plenty of creative offshoots (self-driving cars) but large, traditional business? Not really. Is there a single Google employee who owns a blue cotton button-down shirt?
Microsoft's enterprise-friendly stance will be an ever larger advantage as cloud leaves its infancy. Romancing business clients (as opposed to startups and developers) calls for a longer sales cycle and much more hand holding. As businesses consider migrating more to the cloud, they’re painfully aware of an inconvenient truth: cloud is a form of vendor lock-in that’s terribly similar to the old days of choosing one vendor for a critical chunk of your data center. Amid all the happy-talk about cloud’s advantages, that lock-in doesn’t get much press, but it’s hard to argue against. By the time a company contracts with a cloud vendor and then spends months/years getting fully synced, switching to a new vendor is an exponential headache, not to mention a hard-to-calculate expense.
All of which means: enterprise are very reluctant to start to do business with a cloud vendor that doesn't understand their market sector. And Microsoft speaks the starchy (and highly lucrative) language of the enterprise. This fact alone is a huge boon to the Azure platform.
In reality, there's more than one horse race in cloud computing. It’s hard to say which cloud platform will be the biggest – and that may even be beside the point. Because ultimately there’s more than one cloud market. Azure will be strong for the enterprise, AWS will likely remain a favorite for start-ups and app developers. Google, IBM? Who knows which sectors they’ll win. The future remains, well, cloudy. But either way: Amazon, look out. Microsoft is gaining fast.
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