Cloud business analysis of AWS, Google, Alibaba and Microsoft

Cloud market share in 2017Amazon’s Web Services business (AWS), Google Cloud, Alibaba Cloud and Microsoft Cloud performed well in the global Cloud market in December quarter of 2017.

AWS’s revenue of $5.1 billion, Microsoft Cloud’s $5.3 billion, Google Cloud’s $1 billion and Alibaba Cloud’s $533 million in Q4 2017 indicates that there will be more tight competition in coming months.

Microsoft is the Cloud champion based on revenue — beating AWS.

Google Cloud

Google’s Cloud has reached the $1 billion milestone in Q4 2017. Google CEO Sundar Pichai said the Cloud business has reached a meaningful scale, creating a $1 billion revenue-per-quarter segment for the search engine company.

Meaghan McGrath, analyst at TBR, said Google Cloud is still 5x smaller than both of its primary competitors — AWS and Microsoft — despite reaching the $1 billion milestone in the latest quarter.

Google has entered the global Cloud Platform market later as compared to PaaS and IaaS services from AWS and Microsoft Azure. But Google could enhance its value proposition and messaging for enterprise clients over the last two years.

Sundar Pichai noted the Google Cloud business is increasingly doing larger, more strategic deals with customers in the Cloud space. The number of deals that were over $1 million in value and across all cloud products in 2017 more than tripled the volume of similar deals seen in 2016.

Meaghan McGrath said Google Cloud lacks the same scale as AWS and Microsoft Azure to keep pace with their cloud innovation, but the tactful allocation of more resource from the other Google businesses could help the Cloud unit’s pace of innovation in comparison to its peers, so that it can best compete for public cloud market share.

Google recently announced a $30 billion investment it made in the Cloud infrastructure to reach to more business customers.

The company said Google Cloud Platform, based on publicly reported data for the 12 months ending December 2017, is the fastest growing major public cloud provider in the world.

Global brands such as Bed Bath & Beyond, Dentsu Aegis Network Aegis Network, Keller Williams, Mattel and Tyco Retail Solutions are using Google Cloud. There are four million paying customers on G Suite.

Alibaba Cloud

Alibaba said its Cloud computing revenue grew 104 percent to $553 million, driven by both robust growth in paying customers and revenue mix toward higher value-add product. Alibaba Cloud leads China’s market for infrastructure-as-a-service (IaaS) in terms of revenue, according to IDC. Alibaba Cloud was also the largest platform-as-a-service (PaaS) player in China in the first half of 2017.

Alibaba’s Cloud computing business posted a loss of $28 million in Q4 compared to a loss of RMB92 million in Q4 2016. Adjusted EBITA margin remained stable at negative 5 percent in the quarter ended December 31, 2017.

Alibaba Cloud launched 396 new products and features and introduced AI technologies to tackle real-world challenges, such as traffic planning and optimizing efficiency in manufacturing and airport operations.

Alibaba Cloud expanded its customer base across a variety of industries. Watsons China, Geely, Beijing Capital International Airport, are some of the latest clients of Alibaba Cloud. The China-based company is also expanding its presence in India with its own data center in the country.


AWS revenue reached $5.113 billion in Q4 2017 from $3.536 billion in Q4 2016 and $17.459 billion in 2017 against $12.219 billion in 2016.

Amazon’s AWS continues to lead the public cloud PaaS and IaaS market, as the business unit accelerated revenue growth to 44.6 percent in Q4. Customers continue to adopt services at a higher growth rate higher than revenue growth, a function of the business’ propensity to reduce service costs when efficiencies allow, said TBR analyst Meaghan McGrath.

Meaghan McGrath said AWS aspires to maintain its top spot in the market and is sitting at the bleeding edge of innovation. AWS launched 497 new services and features in the quarter, and a total of 1,430 services and features in 2017, while still delivering a 26.5 percent operating margin in Q4.

TBR believes AWS’ strides to bring its digital assistant from the consumer market to enterprises through Alexa for Business will take root quickly and propel AWS’ mindshare in the ML and AI space alongside other AI developer services that are closely challenged by Microsoft Azure and Google Cloud functionality.

AWS announced several enterprise customers: Expedia, Ellucian, and DigitalGlobe, The Walt Disney Company, Turner, Symantec, Expedia, Intuit, the National Football League (NFL), Capital One, DigitalGlobe, Cerner, Bristol-Myers Squibb, Honeywell, Experian, FICO, Insitu, LexisNexis, Sysco, Discovery Communications, Dow Jones, and Ubisoft.

AWS expanded its infrastructure in 2017, launching a new region in France and a second AWS Region in China. AWS plans to open 12 more Availability Zones across four regions (Bahrain, Hong Kong, Sweden, and a second GovCloud Region in the U.S.) between now and early 2019. AWS now operates 52 Availability Zones across 18 infrastructure regions globally.

The number of databases migrated to AWS in 2017 using the AWS Database Migration Service is accelerating — growing more than 100 percent over 2016 to more than 54,000 databases migrated since the introduction of the service.

Microsoft Cloud

Software major Microsoft said commercial cloud revenue grew 57 percent — driven largely by stable revenue growth rates of Office 365 and Dynamics 365 and reinvigorated Azure growth of 98 percent.

Microsoft’s combination of on-premises server software, Azure public cloud and Azure Stack, augmented with partnerships, keep the company top of mind for customers constructing hybrid environments. Microsoft has nearly doubled Azure revenue, driven by hybrid use cases and new workload adoption, said TBR analyst Kelsey Mason.

Kelsey Mason said Microsoft’s investments in emerging technology such as Internet of Things (IoT), artificial intelligence (AI) and high performance computing (HPC) create net-new opportunities for Azure and add greater value to Office 365 and Dynamics 365.

According to a Reuters report, the December quarter was the 10th in a row of more than 90 percent revenue growth for its flagship Azure cloud computing service.

Revenue from Microsoft’s intelligent cloud segment rose 15.3 percent to $7.8 billion in the company’s fiscal second quarter, including 98 percent growth for Azure.

Amazon Web Services is the leader of the $14.4 billion cloud computing market with more than 31.8 percent market share, but Azure has been growing fast and holds the No. 2 position with 13.9 percent of the market, according to 2017 third quarter estimates by research firm Canalys.

Baburajan K

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