How Amazon Has Maintained Its Market Dominance In Cloud Services

Key takeaways

Cloud computing has become essential for over 90% of global enterprises, enhancing performance and efficiency.
Amazon Web Services continues to dominate the cloud market, generating significant revenue compared to competitors.
Despite a slowing growth rate, AWS's market presence remains robust, outpacing its nearest rivals combined.
Microsoft Azure and Google Cloud Platform have shown substantial growth, yet AWS remains significantly larger.

In the world of cloud computing, embracing cloud solutions can lead to improved business performance, increased cash flow, efficiency and other associated benefits. According to a recent market report, cloud computing has become a driving force in the enterprise tech world with over 90% global enterprises and startups adopting cloud to accelerate business. Cloud has also emerged as the largest spend in IT infrastructure budgets with over $33 billion spent in 2015 over cloud computing. And looking at the current trend, Amazon Web Services is clearly leading the market.

AWS And Its Popularity

In terms of leadership, Q1 data from Synergy Research posited AWS as cloud leader generating a revenue growth of $1.2 billion in the last four quarters. According to John Dinsdale, chief analyst and research director at Synergy Research, the increasing dominance of hyper-scale companies is playing out, with all four leading tech giants growing their revenue substantially. Dinsdale explained how Microsoft Azure and Google Cloud Platform have doubled in size while IBM leads in the hosted private cloud. But AWS numbers are astounding — AWS is over three times the size of its nearest competitor. Another revelation is that even though the year-on-year market growth rate is nudging down, overall it remains at over 40%. In other words, Dinsdale explains that AWS is so big that its revenue outweighs the next four competitors combined.

Comparison

Here’s a look at the top 5 cloud computing players -- AWS, Microsoft and Google who are the leaders in providing IaaS/PaaS segments; and IBM who’s the leader in the hosted private cloud. Another cloud provider is Alibaba which is now the number fourth provider of IaaS, thanks to very strong growth in its home Chinese market, helped by an aggressive expansion abroad. Even though AWS is viewed as a market leader with a whopping 41.5% applications being deployed on AWS, Microsoft Azure is gaining ground quickly in application workload. Synergy breaks down the market share of all the leading cloud competitors explaining how Microsoft has a 14 percent market share followed by IBM with 8 percent and Google with 6 percent. Meanwhile, Alibaba ranks fifth with 4 percent market share.

Despite Competition From Azure And Google, Aws Continues Its Market Lead

Market researcher Forrester predicts that Google has a fighting chance of catching up with Google, by sizing up 76 percent of cloud revenue in 2018 and expand its share to 80 percent by 2020, however, even as competitors try to differentiate themselves with solutions and offerings, AWS will remain dominant.
Why businesses are opting for AWS is because it already has the infrastructure in place which is unmatched and in terms of costs, customers have to pay much less for both cloud and on-premise solutions as compared to other players. Also, market research analysts emphasise that AWS Marketplace offers many highly intuitive products priced on an hourly basis, with no upfront cost.
According to a Fingent report, AWS is a safe bet for enterprises and businesses since it offers storage, computational power when needed. In addition to this, AWS is suitable for both big enterprises and small and mid-sized businesses. It offers similar high-grade security features for small businesses as a Fortune 500 company.

Outlook

According to Technavio, the global cloud computing service market is set to grow steadily at a CAGR of more than 13% throughout 2018-2022, and the leading cloud computing service providers including AWS, Microsoft, Google and Alibaba will continue to dominate the market in the forecast period.