For any tech segment, the top 3 vendors are the centre of attention. When it comes to the cloud, we have heard many times in analyst reports that AWS, Microsoft Azure and Google Cloud Platform are the leading cloud companies. But there is contention (and perhaps confusion) for the third spot.
If we consider that market leadership is recognised by revenue, and mainly cloud revenue, IBM announced that it makes more money than Google by a noteworthy margin. Yet, analyst reports put IBM below Google, which is quite baffling — given the former is historically one of the most reputed companies in the cloud market.
What Analysts Consider
IBM specifies the cloud segment in a broader fashion than what analysts do. Analysts say every cloud business has its individual interpretation of cloud, and IBM may be publishing revenue estimates that stretch beyond traditional descriptions.
Analysts prioritise on a sheer public cloud model also known as Infrastructure as a Service (IaaS), which provides customers to rent servers, manage computing and storage capacity with an on-demand and customised pay what you use subscription basis. In fact, almost all of AWS’s $35 billion in cloud sales emanates from core cloud revenue for IaaS. We know that about a part of IBM’s published cloud revenue actually came from core public cloud offerings.
Where Is IBM Making Its Cloud Money?
IBM’s foothold is a long list of clients with legacy IT infrastructure. Many of such clients, including the largest banks, aviation and health companies, still trust IBM in-house servers for their cloud infrastructure (mainly private and hybrid cloud). This is perhaps the area where analysts think IBM may not be a big cloud player as it lags in public cloud customers as compared to other vendors like AWS, Azure and GCP.
While IBM only has a smaller public cloud revenue play compared to AWS, Azure and GCP, it surpasses other cloud vendors when it comes to on-prem servers (private cloud), cloud-related services, including software, hosting services and consulting to assist client firms in migration the cloud.
A Renewed Cloud Market
The infrastructure-as-a-service battle is considered won by Amazon Web Services, Microsoft Azure, and Google Cloud Platform. But, does that mean IBM should not be counted among the top three leading cloud vendors on that basis, given its overall cloud revenue is better than GCP?
IBM certainly wants to emphasise on the cloud, which is also highlighted by their Red Hat mega acquisition worth $34 billion. Red Hat has been the leader of hybrid cloud services business and given many legacy firms would prefer hybrid over pure public cloud platforms, the acquisition will help IBM become one of the leaders in this market. Like Microsoft, and Amazon, for IBM cloud services, are central to their new market model, with previous cloud head Arvind Krishna becoming the new CEO.