Cloud Computing Market Leaders, 2015
When Gartner speaks, the cloud computing market listens. In the fractured, still immature cloud market, the research firm's annual Magic Quadrant for Cloud Infrastructure is widely considered the authoritative report on trends and vendor ranking. The moment it's released, vendors trumpet it or spin it, and pundits tweet and pontificate about it voluminously. One of the report's three authors, Lydia Leong, is arguably the cloud's leading authority.
The report is a hefty tome whose complexity reflects the cloud market's many technologies, with a handful of vendors combining/developing a variety of emerging technologies. Amid the report's dense verbiage, here's a summary of the two market giants that are most shaping the market.
Amazon Web Services: The Undisputed Leader.
The level of dominance Amazon Web Services (AWS) has in the cloud market can hardly be overstated (see the graphic below). While Microsoft holds a respectable number two position, the cloud market can be summed as "there's Amazon, and then there's everyone else." Most of the other vendors could disappear and the vast bulk of the cloud market would remain. It's remarkable but it's true: a web-based business that got its start as a lowly bookseller has clearly bested the most powerful legacy IT vendors in the generational shift of our lifetime.
The report is clear about AWS's strengths: "AWS has a diverse customer base and the broadest range of use cases, including enterprise and mission-critical applications. It is the overwhelming market share leader, with over 10 times more cloud IaaS compute capacity in use than the aggregate total of the other 14 providers in this Magic Quadrant."
High Praise for AWS
The praise gets even higher: "AWS is a thought leader; it is extraordinarily innovative, exceptionally agile, and very responsive to the market."
Gartner does issues a few cautions. It indicates that AWS can be a "complex vendor to manage," and it points out that AWS is "spreading its efforts very broadly." (Which long term, of course, is likely a powerful positive in the race to offer the greatest depth of functionality.)
The report breaks down cloud customers, roughly, into Mode 1 and Mode 2. Mode 1 is traditional IT: legacy workhorse apps and compute resources of established businesses; these customers aren’t early adopters. Mode 2 is the many forms of the cutting edge: developers, start-ups, the mobile app world, speculative tech ventures.
Gartner identifies AWS as primarily appealing to Mode 2 buyers – certainly the developer/start-up crowd was AWS's big head start over the least several years. But Gartner also notes that AWS is "now commonly chosen for Mode 1 needs as well." It's this ability to play in both worlds that is AWS's greatest strength.
Microsoft: Coming on Strong
Microsoft's cloud offering, Azure, initially launched as a PaaS platform, adding IaaS functionality in 2013. Since the Gartner report ranks the IaaS market only, the fact that Microsoft holds the number two spot after a relatively late start reflects the software giant's deep investment in cloud.
As Gartner states, "Microsoft's brand, existing customer relationships, history of running global-class consumer Internet properties, deep investments in engineering, and aggressive roadmap have enabled it rapidly to attain the status of strategic cloud IaaS provider."
If Not for AWS, Microsoft Would Dominate the Cloud
Azure has more than twice as much cloud IaaS capacity as all the other vendors running behind it; if not for AWS, Microsoft would dominate the cloud. This, by itself, is as remarkable as AWS's early lead. Think of it: Microsoft, launched in 1975, and having stumbled in the critical area of mobile, has found solid, dominant footing in today’s forward-looking technology. Very few tech companies can boast of that level of generational refresh.
Perhaps its greatest strength: Azure "appeals to both Mode 1 and Mode 2 customers," Gartner states. Certainly Microsoft has enterprise in its DNA, so of course it will be strong with its legacy customers, the Mode 1 crowd. Indeed, the report notes that Azure has been a way for Microsoft to leverage its existing client relationships. Long time customers "value the ability to use Azure to extend their infrastructure-oriented Microsoft relationship and investment in Microsoft technologies." And the Mode 2 developer crowd likes Azure’s integration with Microsoft’s app development tools and related technologies.
Price Competition is Tough
Gartner notes that "Microsoft Azure encompasses integrated IaaS and PaaS components that operate and feel like a unified whole." This is a deep strength as PaaS technology continues to gain adherents.
Also key: Microsoft's deep pockets allow it to keep up with AWS's (and Google's) aggressive price cutting, the so-called "race to the bottom" that's taking place in cloud computing. This price competition is a two-edged sword: not only does cloud require gargantuan resources to be a vendor, the price competition is notoriously tough. The IaaS cloud market is no place for little players. Notes Gartner: "Microsoft has pledged to maintain AWS-comparable pricing for the general public, and, on a practical level, customers with Microsoft Enterprise License Agreement discounts obtain a price/performance ratio that is comparable to AWS."
The report offers some cautions about Azure. While Microsoft has met its promised timeframes for introducing critical features, "It has not finished introducing all such functionality." Additionally, "Customers who intend to adopt Azure strategically and migrate applications over a period of one year or more (finishing in 2016 or later) can begin to deploy some workloads now, but those with a broad range of immediate enterprise needs may encounter challenges."
Gartner's toughest criticism of Azure: Some customers have expressed concern about Azure outages, "which may necessitate ensuring that critical applications on Azure have a non-Azure disaster recovery solution."
In sum, the race to capture market share will grow ever more fierce in the years ahead. Here is Gartner's IaaS Magic Quadrant view of the current cloud scene:
