A big transformation is taking place in information and communications technology (ICT) that has forever changed how we use the technology. Whether it is individual consumers or multi-national organizations, cloud computing has given us a new perspective on the way we view the infrastructure, platform and software we use with our desktops, laptops, smartphones and tablets. Cloud has forced everyone that uses a computing device, for work or play, to take a closer look at the inefficiency of their current modus operandi.
The delivery of this technology requires cloud providers offering SaaS (News - Alert), IaaS, and PaaS in public, private and hybrid cloud with a wide range of options. The market has one dominant player, which until now could claim it had the combined market share of its four closest competitors. However, Amazon Web Services (AWS) can no longer make that claim, because Microsoft (News - Alert), IBM, Google, and Salesforce have been making impressive double and triple digit growth this year.
An analysis released by Synergy Research Group and Gartner (News - Alert) for Q2 shows cloud service providers are in a heated battle to keep and capture new market share, with Microsoft and IBM making significant gains in the past quarter.
When Synergy (News - Alert) reported Q1 results of the current fiscal year, Microsoft had 154 percent year-over-year growth for its IaaS, PaaS, and hybrid cloud services. The company's cloud infrastructure grew 2.3 times faster than AWS, which rose by 67 percent followed by IBM (News - Alert) at 80 percent, Google at 60 and Salesforce at 37 percent.
In the last quarter AWS still had more market share than the top four, with 27 percent. Microsoft, IBM, Salesforce, and Google had 8, 6.5, 6, and 4.5 percent share of the market, respectively.
The growth Microsoft experienced from Q1 to Q2 can be attributed to the price cuts it made across many different categories in its cloud offering. According to Synergy, Microsoft Azure slashed prices on computing by 27 - 35 percent, storage by 44 - 65 percent, Windows instances by 27 percent and memory-intensive Linux instances by 35 percent.
In the second quarter AWS' growth rate for IaaS dropped to 49 percent, while Microsoft's was up from the previous quarter to 164 percent and IBM's to 86 percent.
"It has become clear that AWS finally has some tough competition to face. Until this quarter it could claim that it was bigger than its four nearest competitors, but now at least one jewel has fallen from its crown. While it remains a formidable leader of the market, Microsoft is making some huge strides in IaaS and PaaS while IBM now has clear leadership in the private & hybrid infrastructure services segment," said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group.
The lead AWS has over its competitors cannot be understated. Synergy estimates Microsoft cloud only has less than one-third the size of AWS, and it would take it six to seven years to catch up, relative to size, if it keeps growing at 80 percent for the next seven years, while AWS does the same at 50 percent.
The cloud market is growing at such a blistering pace because the players investing in the segment are some of the largest companies in the world. With AWS, Google, IBM, Microsoft, Salesforce and others battling it out, the competition is going to create an industry that will be driven by innovation and low cost.