They say a flood lifts all boats, but given the revenue growth rates across the entire cloud computing sector, something more akin to a tsunami is occurring.
A report issued this week by Jeffries, an investment banking firm, says the top cloud service providers generated $69.22 billion in annualized revenue, which accounts for 68 percent of the market. Collectively, a handful of companies account for 86 percent of that revenue. They include:
Amazon Web Services (AWS): $18.34 billion in annualized revenue with a 42 percent year-over-year growth rate to claim 26 percent of the market
Microsoft Azure: $21.21 billion in annualized revenue with a 64 percent growth rate to claim a 31 percent share
Salesforce: $9.95 billion in annualized revenue with a 23 percent growth rate to claim a 14 percent share
Oracle Cloud: $6.11 billion with a 60 percent growth rate to claim a 9 percent share
IBM Cloud: $6.03 billion in revenue with a 23 percent growth to claim a 9 percent share
Google Cloud: $5.8 billion in revenue with a 64 percent growth rate to claim an 8 percent share
Alibaba Cloud: $1.79 billion in revenue with a 92 percent growth rate to claim a 3 percent share
Continued AWS dominance
The Jeffries report combines all the revenue generated via Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) offerings. The report estimates that in terms of pure IaaS/PaaS revenue the total generated equals $35.8 billion, which is growing at 54 percent annualized rate.
AWS still dominates this sector of the cloud market. But, the Jeffries report notes that while AWS is growing at a 42 percent base, the faster rate at which several rivals are growing on a smaller base suggests the IaaS/PaaS market is much more competitive in 2017 than it was in 2016.
In effect, the Jeffries report confirms managed service providers are now operating in a multi-cloud universe. To focus on any one cloud service these days is to at a minimum ignore two-thirds of the addressable market.
Microsoft gains ground
The biggest beneficiary of this shift has been Microsoft. In the past year, Microsoft has made significant progress in terms of adding features and improving the performance of its Azure cloud services. Earlier this month, SAP announced that it is making its S/4 ERP suite of applications on the Azure cloud, and that both SAP and Microsoft will be using that instance of S/4 to run internal operations.
Top cloud providers generated $69.2B in revenue in 2017, but the rest of the IT market stills measures in trillions
As the number of independent software vendors making instances of their applications available on Azure increases, the gap between Microsoft and AWS continues to narrow. At the same time, Salesforce, Oracle, IBM, and Google are all growing rapidly as well.
MSPs in a multi-cloud world
The challenge that creates for MSPs is each cloud requires an MSP to master multiple management frameworks. There is some hope the rise of containers and Kubernetes clusters will eventually make managing multiple clouds simpler. But for now, managing multiple clouds is a complex endeavor.
MSPs can assume 2018 will bring much of the same in terms of cloud service growth. But, they need to remember that the rest of the IT market is measured in trillions of dollars. That means on-premises IT environments will be driving significant revenue streams for MSPs for many years to come.