Spending on global Cloud infrastructure services increased 33 percent to $62.3 billion in Q2 2022, driven by a range of factors, according to Canalys report.
The growth drivers include demand for data analytics and machine learning, data center consolidation, application migration, cloud-native development and service delivery.
The latest Canalys data shows expenditure was over $6 billion more than in the previous quarter and $15 billion more than in Q2 2021.
The top three Cloud vendors in Q2 2022 are Amazon Web Services (AWS) with 31 percent, Microsoft Azure with 24 percent and Google Cloud with 8 percent share.
AWS accounted for 31 percent of total cloud infrastructure services spend in Q2 2022, making it the leading cloud service provider. AWS grew 33 percent on an annual basis.
Azure was the second largest cloud service provider in Q2, with a 24 percent market share after growing 40 percent annually.
Google Cloud grew 45 percent in the latest quarter and accounted for an 8 percent market share.
The hyperscale battle between leader AWS and challenger Microsoft Azure continues to intensify, with Azure closing the gap on its rival. Microsoft pointed to a record number of larger multi-year deals in both the US$100 million-plus and US$1 billion-plus segments.
A diverse go-to-market ecosystem, combined with a broad portfolio and wide range of software partnerships is enabling Microsoft to stay hot on the heels of AWS.
“While opportunities abound for providers large and small, the interesting battle remains right at the top between AWS and Microsoft. The race to invest in infrastructure to keep pace with demand will be intense and test the nerves of the companies’ CFOs as both inflation and rising interest rates create cost headwinds,” said Canalys VP Alex Smith.
Both AWS and Microsoft are continuing to roll out infrastructure. AWS has plans to launch 24 availability zones across eight regions, while Microsoft plans to launch 10 new regions over the next year. In both cases, the providers are increasing investment outside of the US as they look to capture global demand and ensure they can provide low-latency and high data sovereignty solutions.
Microsoft announced it would extend the depreciable useful life of its server and network equipment from four to six years, citing efficiency improvements in how it is using technology. This will improve operating income and suggests that Microsoft will sweat its assets more, which helps investment cycles as the scale of its infrastructure continues to soar.
“The question will be whether customers feel any negative impact in terms of user experience in the future, as some services will inevitably run on legacy equipment,” Alex Smith said.
Beyond the capacity investments, software capabilities and partnerships will be vital to meet customers’ cloud demands, especially when considering the compute needs of highly specialized services across different verticals.
Cloud vendors are accelerating their partnerships with a variety of software companies to demonstrate a differentiated value proposition. Recently, Microsoft pointed to expanded services to migrate more Oracle workloads to Azure, which in turn are connected to databases running in Oracle Cloud.
