Amazon Web Services (AWS), Microsoft Azure and Google Cloud are three of the main beneficiaries of the move to the cloud over the past decade and a half. Over the years the three cloud providers have jostled for business with one another to gain a slice of a market forecasted by GlobalData analysts to be worth $948bn in 2030.
Thanks to first-mover advantage AWS, Amazon’s cloud subsidiary, has consistently been the market leader since launching in 2006 – but rivals Microsoft and Google have been making steady ground. Each of the companies provides software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS) via its software offerings and data centres located around the world.
Last week the three tech giants published their most recent financials, revealing the current state of play among the cloud hyperscale leaders. Comparing their cloud revenue like-for-like is not possible because not all companies give a complete revenue breakdown. But in terms of year-over-year (YoY) cloud revenue growth, Azure came out on top at 50%. It was closely followed by Google Cloud at 45%, while AWS notched up 32% YoY revenue growth.
According to a recent report by Canalys, AWS had a 32% share of the cloud service provider market in the first quarter, while Azure comes in second with 19%. Despite trailing, Microsoft has consistently reduced the gap with its largest cloud rival over the last few years. In 2017, AWS dominated 51.8% of the market vs Azure’s 13.3%, according to Gartner.
In terms of overall revenue, it is almost certain that AWS retains the top spot once again this quarter, although Azure continues to narrow the gap. Here’s the full breakdown of how the cloud divisions of Amazon, Microsoft and Google fared last quarter.
AWS has been a reliable source of income that supplements the ecommerce behemoth’s retail sales. This quarter, AWS brought in $13.5bn in revenue, up 32% YoY. It came amid yet another blowout three months for Amazon, which brought in $108.52bn overall as it continued to benefit from the shift to online shopping accelerated by the pandemic.
AWS too benefited from digital transformation projects sped up by the pandemic and now has a $54bn annual sales run rate. Its operating income for the quarter stood at $4.16bn.
It means that AWS currently accounts for 12% of Amazon’s total revenue. As pointed out by The Register, AWS alone is likely to have larger revenue than IBM by the end of the year once the latter has spun out managed services unit into the standalone, newly christened Kyndryl.
The cloud giant continues to add new data centre locations, including the launch of a second full region in Japan in the quarter just gone.
Amazon founder and CEO Jeff Bezos described AWS as his company’s 15-year-old kid that alongside Prime Video is “growing up fast and coming into their own.”
He added: “In just 15 years, AWS has become a $54bn annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating – up 32% year over year.”
However, there was a slight growth slowdown when compared with AWS sales in the year-ago period, with the company reporting 33% YoY for the three months ended 31 March 2020 versus 32% this year.
“After a slight slowdown in the pace of growth during the pandemic, in which troubled businesses offset increased adoption of cloud services, stronger growth has resumed,” said Martin Garner, COO at CCS Insight. “This is driven by an increased pace of digitalisation across most sectors and by some badly hit sectors starting to build their business back up.”
AWS counts Netflix among its customers and recently confirmed that rival streaming service Disney+ used AWS infrastructure to power its global rollout.
Globally, AWS has 80 Availability Zones across 25 geographic regions.
Microsoft Azure bundles its Azure figures in with its “Intelligent Cloud” business segment. In its recent Q3 results, Intelligent Cloud revenue grew 23% YoY to $15.12bn.
Because this also includes revenues from Enterprise Services, SQL Server and other products, it is impossible to make a direct revenue comparison with rivals.
Despite this, we can see from the information shared by Microsoft that Azure is a key growth driver for Intelligent Cloud, with Azure revenue alone growing by 50% YoY.
Using this metric, Azure had the highest revenue growth out of all of Microsoft’s products. The product that came closest was enterprise resource planning application Dynamics 365, which had 45% YoY revenue growth in its most recent quarter.
Of Microsoft’s three business units, Intelligent Cloud was once again the company’s biggest revenue driver (just). It accounted for 36% of Microsoft’s overall revenue of $41.7bn.
“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” said Satya Nadella, chief executive officer of Microsoft in a statement. “We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”
Microsoft did not provide an up-to-date number for its data centre regions in its earnings report, but according to the US firm’s website it has more than 60. Last month Microsoft announced it will invest $1bn over the next five years to build a new data centre region in Malaysia.
For all of Google’s dominance in search and advertising, it finds itself a challenger in the cloud computing market. However, it has been making steady progress in recent years and this quarter was no different – revenue increased by 46% YoY to $4.05bn.
Parent company Alphabet includes revenue from infrastructure and data analytics platforms within its Google Cloud segment, as well as collaboration tools and services for enterprise customers. The company said the segment brings in revenue “primarily from fees received for Google Cloud Platform services and Google Workspace collaboration tools”, again making it impossible to break down cloud provider revenue to IaaS, SaaS and PaaS levels.
Despite its strong growth, Google Cloud still only accounts for 7% of the tech giant’s overall revenues. And more importantly, it remains a loss-making business segment. In the three months ended 31 March, Google Cloud’s operating losses totalled $974m. It is on the right trajectory, having reduced operating losses from $1.73bn this time last year.
Google CEO Sundar Pichai said: “We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”
According to December figures, Google Cloud has 73 data Availability Zones across 24 regions.
Nick McQuire, chief of enterprise research at CCS Insight, said the results were “impressive” and indicate that “Google Cloud is very much a contender to win the market for enterprise cloud services.”
He added: “The bottom-line picture is improving for Google Cloud, largely due to the investment the company is making in hiring senior industry expertise. This is a cog in part of its larger strategy to secure large scale enterprise deals.”
Google has “real credibility” when it comes to assisting companies looking to transform their business models with “higher-level” cloud service, he continued.
“While it’s still a challenger in the market, opportunities abound for Google Cloud to gain market share and push ahead of other competitors – it’s all to play for today.”