With every major tech company in the world chasing part of the cloud computing market, what are they fighting for? Close to $300 billion. The business, however, may not be terribly profitable.
According to Market Research Media:
The global cloud computing market is expected to grow at an 30% CAGR reaching $270 billion in 2020, concludes the latest research report covering the cloud computing products, technologies and services for the global market
The base year for the forecast is 2015.
As huge corporations jockey for leadership in the cloud business, price may be as important differentiator as anything else. Amazon.com Inc. (NASDAQ: AMZN) dropped the price of its product last year as a means to match a discount offered by Google Inc. (NASDAQ: GOOGL).
The Amazon Web Services cloud business eventually could be larger than Amazon’s e-commerce business, says founder and CEO Jeff Bezos. Since Amazon’s core business has revenue of nearly $100 billion a year, Bezos might assume that Amazon will have a huge share of the market within a few years. Among the companies chasing Amazon are Microsoft Corp. (NASDAQ: MSFT), where new CEO Satya Nadella has made cloud revenue his top priority. As last quarter’s earnings were released he commented:
Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership. “We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers.
Deeply troubled International Business Machines Corp. (NYSE: IBM) has made cloud progress a priority as well. The company recently announced it would invest $4 billion this year to boost cloud and mobile initiatives to push IBM revenue in these business to $40 billion by 2018. The number presumes IBM will end up with a large piece of the cloud market.
As dozens of large companies press to get a portion of what will clearly be a market with hundreds of billions of dollars, and as start-up firms target the same business, not everyone can have a double-digit piece of $300 billion. Some companies have to lose, particularly if price is a key to winning.