Amazon continues crushing competition in the public cloud market, but analysts expect the tech giant’s market share dominance to steadily dwindle in the coming years as competitors such as Microsoft, Google and Alibaba keep gaining traction.
Research firm Gartner concludes in a new report that the market for cloud services is growing faster than virtually every other information technology segment, with revenue in the infrastructure-as-a-service cloud sector ballooning to $22.1 billion in 2016. That’s an increase of 31 percent compared to 2015, according to Gartner.
The report also highlights that Amazon doesn’t just currently sit atop the pile of providers in the IaaS public cloud sector — it dwarfs all competitors by controlling 44 percent of the total market, which is more than double the market share of the next nine cloud providers combined. Amazon’s market share jumped from nearly 40 percent a year ago.
But Gartner analysts say that Azure and Google’s cloud services both gained momentum in 2016, with Microsoft’s market share increasing from 5.8 percent to 7.1 percent and an incremental Google increase from 1.5 percent to 2.3 percent.
“Looking forward, Gartner’s position is that while competitive pressures increase, Amazon will witness growth erosion in share, as the non-hyperscale providers struggle to provide value through their services, while other IaaS market leaders will see an increase in growth,” the report says.
Microsoft easily ranked second in the market, according to the report, which cites the company’s “investment in the development of IaaS capabilities and in solid sales and marketing execution. The company’s revenue grew by nearly 62 percent last year, according to the report, but the biggest year-over-year revenue gain came from Chinese tech giant Alibaba.
According to the report, Alibaba’s revenue grew last year by 127 percent in the IaaS market. The company now has 3 percent of market share, ranking it third— ahead of marquee names like Google, Rackspace and IBM. Gartner says the strong numbers reflect Alibaba’s position as the “current volume leader and dominant player in the cloud services market in China,” noting that the company has actively expanded its international footprint and launched four new data centers in 2016.