This Week’s Top Cloud News Headlines
Apple Talks New Data Centers
Apple’s cloud expenses could be what is prompting it to begin investing in its own data centers.
Huawei Partners with Infosys
The two companies signed a collaboration agreement to help enterprise customers transition quickly to the digital cloud.
Alibaba Cloud’s Customer Sentiment
Alibaba Cloud ranked first in Asia Pacific according to a Gartner report about IaaS share in Asia Pacific for 2018.
Kata Containers Project Announces Bare Metal Verification
The OpenStack Foundation’s Kata Containers project announced bare metal verification of Kata plus Firecracker running on AWS.
For a more in-depth analysis see below.
Watch the Liftr Cloud Look Ahead, a weekly video series that presents recent cloud news with an eye toward the future. Check out this week’s video to stay current and prepare for what’s next in the cloud industry.
Liftr Cloud Index
The daily Liftr Cloud Index compares the competitive state of the cloud service provider (CSP) infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) products.
The overall Liftr Cloud Index for the week ending Friday 4/26/2019 was 103.9 (+0.0%), unchanged from the previous week. All tracked CSPs were flat from week-to-week. Amazon AWS (108.4, 0.0%) and Microsoft Azure (106.0, 0.0%) maintain their lead over #3 Google Cloud (83.5, 0.0%) and #4 Alibaba Cloud.
Download our free sample Liftr Cloud Index 4Q 2018 Analysis.
In-Depth Analysis
Alibaba Cloud’s (also known as “Aliyun”) overall Liftr Cloud Index score (66.7, +0.1%) was flat from the previous week. Its Instance score (92.7, +3.1%) increased as it lowered product costs, but Sentiment decreased (104.7, -2.4%) amid negative social media activity.
Alibaba Cloud ranked first in Asia Pacific according to a Gartner report about IaaS share in Asia Pacific for 2018. According to the report, Alibaba Cloud led the Asia Pacific market for IaaS and IUS with 19.6% market share, a 4.7% market share gain from 2017. Alibaba Cloud has 15 availability zones in the region outside mainland China, covering Hong Kong, Singapore, Australia, Malaysia, Indonesia, India and Japan markets.
Amazon Web Services’ overall index score (108.4, 0.0%) was unchanged from the previous week. It was reported that Apple spends more than $30 million on AWS products and services every month, up 10% over last year. Apple has a multi-year deal with AWS that requires it to spend at least $1.5 billion over the course of 5 years: Apple may be looking to build its own data centers in the future.
OpenStack Foundation’s Kata Containers project announced bare metal verification of Kata plus Firecracker running on AWS. With the introduction of Firecracker hypervisor support in Kata Containers, bare metal verification of Kata + Firecracker on AWS has become a priority. The Kata Project is now in the process of migrating Firecracker jobs to AWS.
AWS created a new cost management blog, in reaction to Microsoft Azure’s cost management announcement last week. Additionally, AWS has added a new Asia Pacific Region in Hong Kong. AWS customers are now able to use this Region to serve their end users in Hong Kong at a lower latency.
AWS simultaneously announced preview support for EC2 A1 (Arm-based) instances on a Kubernetes cluster to be managed by Amazon EKS. This is a key DevOps requirement for AWS to run Arm instances alongside x86 instances in a heterogeneous cloud.
Our soon-to-be-released Liftr Cloud Components Tracker shows AWS did not deploy EC2 A1 instances in more regions in April, nor did AWS deploy existing EC2 A1 instance types in new regions. We expect that to change during 2019, as AWS recoups its investment in developing its in-house EC2 A1 hardware and software infrastructure by increasing the number of regions it deploys the instance it as well as creating new instance types.
Google Cloud’s overall index score (83.5, 0.0%) was unchanged. Google Cloud announced a partnership with Atos and T-Mobile Netherlands to deliver a new scalable chatbot. The chatbot will leverage Atos AI and machine learning expertise and the latest AI and ML accelerators from Google Cloud.
Google Cloud updated its how-to guide for refactoring legacy applications for modern Kubernetes based DevOps environments. Finally, the American Cancer Society now uses Google Cloud machine learning to power cancer research.
Microsoft Azure’s overall index score (106.0, 0.0%) was unchanged. Azure’s Cost Management is now generally available for Pay-As-You-Go and Azure Government customers. Microsoft also published a “best practices for migrating SAP applications to Azure, part 1.” The Azure Marketplace lists its new offerings here. Finally, Microsoft Azure has made securing Azure SQL Databases with managed identities easier.
Other Cloud News
Arm and Docker are now collaborating to deliver a consistent Arm instruction set container experience to software developers, from the Internet of Things (IoT) devices through the network to cloud data center compute workloads.
Huawei is partnering with Infosys, a multinational IT services consulting company. The two companies signed an agreement to collaborate to help enterprise customers transition quickly to the digital cloud.
Oracle Cloud and Spotify are promoting their relationship that seems centered on Oracle Cloud providing advanced analytics to Spotify’s automotive advertising customer base.
Xilinx announced its intent to acquire Solarflare, a provider of high-performance, low latency networking solutions for users extending FinTech to cloud computing. Liftr Cloud Insights’ Principal Analyst Paul Teich said,
“It was a smart competitive move on Xilinx’s part to acquire SolarFlare, now that Mellanox is being acquired by Xilinx’s director competitor NVIDIA. I don’t think consolidation in the smart NIC market in 2019 was on anyone’s radar.”
Mellanox uses Xilinx FPGAs in several smart NIC products today, including its programmable Innova-2 Flex Open Programmable Smart NIC.
Earnings Reports
Liftr Cloud Insights is not a financial analyst firm. We provide strategic analysis of company earnings reports and associated end of quarter statements.
Amazon reported that AWS is now at a $30bn annualized run rate. However, its reported revenue was up 3.6% sequentially quarter-to-quarter and 42% year over year, following four quarters of 46% to 48% quarterly year over year growth. Amazon also reported that AWS’s operating margin has improved by 3.2% due to improvements in infrastructure and efficiencies, as well as the ability to add capacity faster, without needing to build it six to twelve months in advance.
Our analysis suggests that larger clouds’ purchasing advantages tend to have diminishing returns at the scale of the largest ten CSPs. We believe that architectural innovation and operational efficiencies have become more important to CSP competitive advantage than the sheer size of infrastructure or reported revenue. AWS’s operating margin improvement may seem small, but it is a big deal.
You can listen to the Amazon earnings call here.
Huawei reported summary quarterly earnings for Q1, a first for the company that only issues annual reports. The company announced its revenue for the first quarter of 2019 was CNY179.7B, an increase of 39% year-to-year.
The point of its very brief and high-level quarterly earnings seemed to be that Huawei is growing substantially despite the United States’ aggressive stance toward blocking Huawei, both in North America and in the UK and Europe.
You can read about Huawei’s earnings here.
Intel’s Data Center Group (DCG) reported Q1 2019 revenue of $4.9B down 6% year-to-year and down 20% sequentially quarter-to-quarter. For comparison, over the past three years, we typically see 7% to 11% decline in Q1.
At the same time, Intel posted record Xeon processors average selling prices, which might mean a richer enterprise mix (less cloud buying). It also might mean that enterprise customers are buying higher core count processors for hyper-converged systems while CSPs are focusing on the memory bandwidth that comes with high core count for cloud-based analytics systems.
Intel also reported that Chinese CSPs pulled back dramatically on Intel Xeon processor purchases at the same time it saw weak enterprise and government data center demand. We’ll see how that plays out over the next few quarters, especially given AMD’s second-generation EPYC processor entering the market in the second half of 2019.
You can listen to the Intel’s earnings call here.
Iridium Communications reported adding 28,000 net new commercial subscribers during the past quarter, all of which came from its IoT business. Its overall quarterly increase from $4.2M to $13.9M, for a $9.6B increase year over year, was due to the higher hosted payload in data service revenues. Its commercial voice business has given way to carrying commercial data. This is part of a continuing trend that Paul Teich wrote about in his Forbes article Moving Data Traffic Off The Ocean Floor And Into Space.
You can listen to Iridium’s earnings call here.
Microsoft reported that over 50% of its Dynamics 365 revenue is now driven by the cloud. Microsoft says it is investing “to make Azure the best cloud for data estates, from data warehousing to real-time stream analytics,” and “to make Azure the best place to build AI.” Microsoft said its Commercial Cloud revenue grew 41% year-to-year and gross margin grew by 5% to 63%, driven by a significant improvement in Azure gross margin.
Q1 was a slow quarter for Microsoft Azure cloud build-out, as it reported $2.6B in cash expenditures on property, plant and equipment. Microsoft expects gross margin percentage to continue to grow during the year, even as it invests in building out more infrastructure in the remainder of the year. Our Liftr Cloud Index shows that Microsoft Azure has narrowed its gap with AWS considerably over the past year and has a reasonable chance of equaling or passing AWS in 2019.
You can listen to Microsoft’s earnings call here.
Xilinx reported growing its Alveo partners’ ecosystem, claiming that it added over 500 independent software vendors to its ecosystem and now has over 3,000 developers trained on its SDAccel Development Environment. Xilinx announced Alveo and SDAccel six months ago at its developer forum, it’s good to see Xilinx is executing on its strategy.
You can listen to the Xilinx earnings call here.
Upcoming Earnings
AMD and Alphabet (Google Cloud) are expected to report their earnings next week. Baidu’s earnings report has been pushed to mid-May.
Upcoming Events
Open Infrastructure Summit (formerly OpenStack Summit): Denver, CO April 29-May 1, 2019
Liftr Cloud Insights Principal Analyst Paul Teich will be at OpenStack’s Open Infrastructure Summit in Denver, Colorado. The event is targeted at builders and operators of open infrastructure, with over 300 sessions and workshops on Container Infrastructure, CI/CD, Telecom + NFV, Public Cloud, Private & Hybrid Cloud, Security and members of open source communities. Contact analyst@liftrcloud.com to schedule a meeting with Paul during the event.
The Next AI Platform San Jose, CA May 9, 2019
Liftr Cloud Insights Principal Analyst Paul Teich will be one of the hosts at The Next AI Platform and will conduct live onstage interviews with leaders in cloud infrastructure and cloud AI technology development. Contact analyst@liftrcloud.com to schedule a meeting with Paul before or after the event.
KubeCon + CloudNativeCon Europe Barcelona, Spain May 20-23, 2019
Liftr Cloud Insights Principal Analyst Paul Teich will be at the Cloud Native Computing Foundation’s KubeCon + CloudNativeCon Europe conference in Barcelona, Spain. The event is targeted at cloud service providers, open source cloud operations framework developers, and cloud applications developers. Contact analyst@liftrcloud.com to schedule a meeting with Paul during the event.
AWS re:Inforce Security Conference Boston, MA June 25-26, 2019
Attendees of AWS re:Inforce will experience two days of security, identity and compliance learning and community building. Although we won’t be in attendance, we’ll be monitoring news and announcements intently.
Check out our upcoming and recent events
Have a great week!
– Paul R. Teich, Principal Analyst, and your Liftr Cloud Insights team
Download our free sample Liftr Cloud Index 4Q 2018 Analysis.
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