Story image

Big 5 cloud providers tighten stranglehold on market

26 Oct 18

The latest figures from Synergy Research Group for the third quarter of this year reveal a prospering cloud infrastructure market.

While slightly lower than the growth rates achieved in the first two quarters of 2018, spending on cloud infrastructure services has still surged 45 percent from the same time last year.

However, it’s the bigger players that are profiting with revenue growth at Microsoft, Google, and Alibaba again far exceeding the overall market growth rate, after all three gained bigger pieces of the pie with Microsoft in particular making substantial gains.

Despite this, Amazon continues its dominance and still holds a market share that is bigger than its next four competitors combined. Amazon managed to up its market share a percentage point to reach 34 percent, with the lower growth rate attributed to the fact that it already holds the majority of the market.

While still holding a significant portion of the market with just over seven percent, IBM’s growth dropped off the pace but Synergy Research Group expects the tech giant to bounce back given its strong leadership in hosted private cloud services.

“This is another really strong set of numbers both for the leading cloud providers and for the market as a whole,” says Synergy Research Group chief analyst John Dinsdale.

“The growth rates are tailing off at some of the leading cloud providers but that is just the law of large numbers kicking in. You cannot keep on growing at 100 percent when you reach massive scale.”

Unfortunately the huge growth experienced by the aforementioned five came at the expense of small-to-medium sized cloud operators. While many of them are still seeing acceptable revenue growth, Synergy Research Group says they are unable to keep pace with the larger competitors due to the lack of scale and financial muscle.

Most of the major cloud providers have released their financial figures for the third quarter, and based off these Synergy Research Group estimates quarterly cloud infrastructure service revenues (including IaaS, PaaS, and hosted private cloud services) are now well in excess of US$17 billion.

Looking deeper within the market, the 45 percent growth rate from the third quarter of 2018 compares with a 44 percent growth rate from the whole of 2017 and 50 percent for the whole of 2016. The biggest revenue earners within the market for the third quarter was Public IaaS and PaaS services, growing by 51 percent.

The dominance of the top five providers is most apparent when focusing just on public cloud, as they account for almost 75 percent of the total market. The cloud market is experiencing strong growth in all regions around the world.

“Interestingly, the role model for sustainable growth is market leader Amazon. Over the last ten quarters the AWS year-on-year growth rate in these markets has been pretty steady and has averaged just a little under 50 percent,” says Dinsdale.

“Given the need for huge scale, most cloud providers outside of the top five are being forced to focus on market niches or specific geographic regions.”

Is self-service BI living up to the hype?
the explosion of data available to a business and self-service BI tools is transforming how everyone works - but is self-service living up to expectations?
What the people say - Gartner’s November Customers’ Choices
A roundup of the latest Gartner Peer Insight Customers’ Choices from Backup and Recovery to Business Intelligence and Analytics, and more.
BlackBerry buys out cybersecurity AI firm Cylance
“We are eager to leverage BlackBerry’s mobility and security strengths to adapt our advanced AI technology to deliver a single platform.”
WA council first to adopt new Datacom tech for local government
The early adopter Shire of Majinup’s initial priority is to use Datascape to help it engage more closely with its community.
Five secrets – Workday’s 2019 winning formulas
We thoroughly investigate why business software vendor Workday believes 2019 will be their best year yet.
Exclusive: Strengths and limitations of the AWS/Cisco partnership
Iguazio CEO Yaron Haviv discusses whether the partnership really is a 'match made in heaven' and what it means for the industry.
Google Cloud CEO stepping down to welcome ex-Oracle exec
Google Cloud has grown significantly under Greene's tenure, but has involved tens of billions of dollars and little gains on AWS and Azure.
Why UCaaS is the channel’s ‘opportunity of the century’
The popularity of UCaaS has grown very fast, with larger organisations across major industries like financial services and healthcare embracing it.