The first round of earnings reports for calendar Q1 2020 have rolled in. We’ll cover Alphabet, Amazon, IBM, Microsoft and Oracle. Let’s take a look, paying particular attention to infrastructure-as-a-service.
Amazon – AWS
Over the course of 13 years, AWS continually refines its infrastructure software to run more efficiently on its hardware. Its goal is to extend the useful life of its internal servers as well as AWS public cloud servers, and so in its Q4 2019 earnings, AWS restated server depreciation from three years to a four-year basis. This server deprecation basis extension is hugely important. AWS stated that the change reflects actual useful server lifetime metrics and is not just an accounting trick. What this means is, cloud infrastructure best practices are maturing at AWS. It will potentially change the cadence of new infrastructure purchases at AWS as cloud adoption matures.
Microsoft – Azure
Microsoft stated that Azure will be the first major cloud provider to open regions in Israel and Qatar, presumably in 2020. Our Liftr Cloud Components Tracker has recorded Alibaba Cloud’s me-east-1 region in Dubai since we started scanning in March 2019. AWS activated its me-south-1 Bahrain region in October 2019. Azure previously launched its uae-central and uae-north regions in Abu Dhabi and Dubai, respectively, in July 2019. So, this new investment in the region is likely to provoke responses from other major clouds.
Alphabet – Google
For the first time ever, Alphabet broke out its overall revenue numbers for Google Cloud in its year-end Q4 2019 earnings call. Google Cloud includes GCP and G Suite. Alphabet will continue to invest in technical infrastructure, stating “investments in particular support ongoing demand for machine learning across our business, as well as for Cloud, Search, Ads and YouTube.” However, in 2019, it set up a core infrastructure to create shared hardware infrastructure for more efficiently deploying machine learning capabilities across its businesses.
Alphabet expects that it will spend relatively more on servers than on new data center construction. This focus is to drive efficiency in optimizing its server fleets and better manage its supply chain.
IBM – IBM Cloud
IBM stated that it is expecting CAPEX growth as it continues to expand its IBM Cloud data center capacity in 2020. IBM is also focused on improving its infrastructure cost competitiveness. While the company did mention its infrastructure capabilities and buildout, it only mentioned IBM Cloud twice by name, unlike all of the other cloud providers we cover in this earnings summary. Taken as a cluster of data, this all may signal an IBM shift away from IBM Cloud IaaS toward PaaS and SaaS services.
Oracle – Oracle Cloud
Although Oracle reported earnings in mid-December, we mention them now because they appear to have changed positioning and have hit a few important milestones. Oracle now runs its own business on it’s own cloud, migrating from traditional IT systems and critical external services. A key part of Oracle’s refocus is a new competitive target – SAP. Larry Ellison, Oracle chairman and CTO, pointed out that SAP never rewrote its core ERP applications for the cloud. As a result, Oracle claims to be replacing a lot of mid-market ERP customers today with its ERP Cloud and expects to launch a product aimed at SAP’s top 50 enterprise customers in March 2020.
Make sure to come back in a few weeks to view our summary of Q1 2020 earnings reports from Alibaba, Baidu, Tencent, as well as Cisco, Dell, HPE, and Lenovo.
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Liftr Cloud Regions Map: http://bit.ly/2LGB5PV
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