Amazon Owns a Third of Global Cloud Market

By Paul Ausick Updated Jan 12, 1:54PM EST · Published Mar 16, 12:15PM EDT

[cnxvideo id=”655424″ placement=”ros”]The worldwide market for cloud infrastructure and services reached $148 billion for the four quarters ending in September 2016, up 25% compared with the four quarters ending in September of 2015. More than half the growth came in two sectors, infrastructure as a service (Iaas) and platform as a service (PaaS), where Amazon.com Inc.’s (NASDAQ: AMZN) Amazon Web Services (AWS) and Microsoft Corp.’s (MSFT) Azure dominated with a combined 53% of year-over-year revenue growth.

In addition to Amazon and Microsoft, the other two leading players in cloud technology are Google/Alphabet Inc. (NASDAQ: GOOGL) and International Business Machines Corp. (NYSE: IBM). Together the four companies control 50% of the worldwide cloud business, with AWS owning about a third of global share, according to Synergy Research Group.

Hewlett Packard Enterprise Co. (NYSE: HPE) and Cisco Systems Inc. (NASDAQ: CSCO) are the leading providers of public and private cloud hardware to data centers, while Microsoft racks up 40% of cloud software market share.

However, John Dinsdale, research director at Synergy Research Group, noted last August that the other big players are showing strength:

The ranking of the next 20 largest cloud providers features some interesting companies, with Alibaba and Oracle growing particularly strongly, but they are all starting from a long way behind Google, which is itself growing by well over 100% per year and yet remains only a sixth the size of Amazon.

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When Oracle Corp. (NYSE: ORCL) reported earnings after markets closed on Wednesday, CEO Safra Catz made a special point of how fast the company’s cloud services are growing:

Our new, large, fast-growing, high-margin cloud businesses are driving Oracle’s total revenue and earnings up and improving nearly every important non-GAAP business metric you care to inspect; total revenue is up, margins are up, operating income is up, net income is up, EPS is up. Take a look.

In the public cloud market, Amazon held 40% of the market in the fourth quarter of last year. Microsoft, Google and IBM held a combined total of about 24%. Everybody else shared the remain 36%. But the “everybody else” group included both Alibaba and Oracle, both of which continue to grow rapidly.

In a February press release, about public cloud leadership, Synergy Research’s Dinsdale commented:

While a few cloud providers are growing at extraordinary rates, AWS continues to impress as a dominant market leader that has no intention of letting its crown slip. Achieving and maintaining a leadership position in this market takes huge ongoing investments in infrastructure, a continued expansion in the range of cloud services offered, strong credibility with the large enterprise sector, consistently strong execution, and the wholehearted and long-term backing of senior management. AWS is checking all of those boxes and any serious challengers need to do likewise.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.