A slowing in Amazon’s Web Services’ astronomical growth rate of recent years has, according to some commentators, made it look as though Microsoft and Google have more of a chance of stealing at least some of itsmarket share.
This latest round of speculation about whether the two leaders of the pack chasing a bigger share of the enterprisemarket has been triggered by the release and the trumpeting of the healthy financial figures by all three.
At the heart of the speculation that Microsoft and Google may be gaining a little on AWS (which is, realistically, still in a league of its own) is the assumption that a growth rate that big, combined with a huge number of customers (surely) can’t be sustainable.
Major drivers for growth of in the enterprisemarket have been the need to get way from the cost and risk of data centres, the attractiveness in the flexibility (and security) that the infrastructure as a service (IaaS) model offers.
Comparing The Three
Few analysts would doubt the complete dominance of AWS, and an accurate, side-by-side comparison of the latest figures is hampered by the fact that Google does not separate out the contribution that themakes to its overall financial results. Nevertheless, it is possible to compare some key aspects of AWS, Google and Microsoft’s position in the IaaS market such as:
- AWS went from Q2 results (in 2015) showing an 81% growth rate on the previous year (and $1.82bn revenue), to a slowing and declining year-on-year revenue growth rate of 78% in Q3 2015, down to 43% in its latest set of financial results (Q1 2017), published on 27 April. 43% is still a huge rate of growth, and is far higher than traditional infrastructure company growth rates. It is also important to bear in mind that AWS is a much bigger organisation than it was two years ago (when it started releasing its figures), and expecting anything like an 80% growth rate for several consecutive years may be unrealistic. The size of the revenues associated with the growth rate is huge, as is the AWS market share.
- In comparison, Alphabet released its Q1 results on 27 April (Google’s parent company). These showed $24.8bn in revenue during the three months to 31 March – up 22% on the previous year.
- The revenue for Microsoft’s public platform Azure was up 93% in Q3 (published 27 April). Its Commercial division reported a 52% increase in year-on-year business and $15.2bn of revenue.
The key point is, therefore, that even though Microsoft and Google are displaying impressive and rising growth rates in theirbusinesses, a declining but still good growth rate for a company such as AWS that already has huge market share, economies of scale and the resulting pass-along lower pricing, makes realistic challenges to its dominance look unlikely for the near future.
Google Trying To Be More Attractive To Enterprises
Alphabet (Google) has reported that its improved growth rate figures in thebusiness are the result of its two-year-long efforts to make its business more enterprise-friendly.
What Does This Mean For Your Business?
Information Services Group (ISG) figures, for example, showed that in 2016, traditional business outsourcing contracts were being replaced by-based services to the point where spending on based contracts increased by 33% compared to 2015. Many more businesses are realising that new kinds of -based contracts offer many different and attractive models such as software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS), all of which essentially provide flexibility / scalability, easier management and upgrades, and lower costs. With greater competition between AWS, Google, Microsoft, and other players in the market, enterprises may enjoy even lower costs and improved service offerings in the future.