The global market for cloud computing is continuing to grow at a pace of more than 40 percent annually, but it is becoming much harder for cloud providers not already established as leaders to win market share.
Synergy Research Group’s latest analysis concludes that “the cloud market continues to grow strongly in all regions of the world,” and that revenue from cloud providers reached $12 billion during the third-quarter.
Moving forward, the research firm forecasts cloud revenue to continue growing more than 40 percent annually as the global market expands. Major providers like Amazon, Google, IBM and Microsoft dominate markets all around the world, except for China where strict data laws have given local companies like Alibaba a huge advantage over U.S. cloud providers.
In terms of global market share, Amazon Web Services continues remains the company to catch and has actually gained ground despite increasingly intense competition, according the research firm.
John Dinsdale, a chief analyst for Synergy Research Group, said it is a “little shocking” that AWS is growing its annual revenue by more than 40 percent while Microsoft, Google, IBM and Alibaba all take aim to chip away at the company’s dominant position in the cloud.
AWS’ revenue through the third-quarter is $12.3 billion, up more than 53 percent compared to a year ago when the company reported $8.6 billion revenue through the third-quarter. AWS is projecting total revenue for the year of $18 billion.
“Microsoft, Google and Alibaba are all growing their revenues much more rapidly than Amazon and they continue to gain market share, but the reality is that in this market Amazon remains bigger than its next five largest competitors combined,” Dinsdale concludes in the report.
While Amazon easily maintains its top spot, Microsoft and IBM continue to respectively hold down second and third place rankings in terms of global market share. Google comes in at fourth, just ahead of Alibaba. Other companies are starting to pick up momentum, according to the report, as “Oracle continues to grow strongly, albeit from a small base, while Salesforce and Rackspace maintain a strong position in specific niche segments of the market.”
But the report also cautions that it will be increasingly difficult for companies not already established as cloud leaders to compete for market share against the field of players already dominating the sector.
“While we forecast 40% growth in the total market for 2017, there’s still something a little shocking about seeing a business unit the size of AWS consistently growing its revenues by over 40%,” Dinsdale said.. “Microsoft and Google too deserve plaudits for the growth rates they are achieving, while IBM is gaining market share in its sweet spot of hosted private cloud services. It is becoming increasingly difficult for cloud providers outside of the leading pack to make an impression on the market share rankings.”