Google and Microsoft are playing catchup with AWS's cloudy power

Hardware 'incumbents' battered – but small fry may drop out soon

AWS continues to dominate the cloud infrastructure market but Microsoft and Google are growing faster than the book-punting behemoth, research from Canalys shows.

None of which will be much comfort to the hardware vendors who have been wrong-footed by the speed at which the cloud has been embraced by their traditional business customers.

Total expenditure on the cloud grew 52.3 per cent in the second quarter, to $9.5bn, the channel research firm found, with North America accounting for 55.3 per cent of total spend, and EMEA 24.7 per cent.

The firm reckons the total market will grow 50 per cent for the year as a whole, to $37.8bn.

AWS continues to dominate the market it – arguably – invented, accounting for 30.4 per cent of that total cloud infrastructure pot and growing 58 per cent year-on-year. Google took 7.4 per cent of the market but grew 80 per cent.

Microsoft took 16 per cent of the market but showed 102 per cent growth, and IBM’s SoftLayer took 6.7 per cent of the market, growing 52 per cent.

Research analyst Ben Stanton said the gap between the big four and the rest of the market was “certainly widening”, with companies outside the big four taking 39.5 per cent of the market compared to 45.7 per cent a year ago.

It was Amazon and Microsoft that were driving the market forward, he said, while “at the bottom end, we’re starting to see some players get squeezed out, and I would expect more consolidation in coming years.”

None of which will be much comfort to anyone relying on the classical hardware market. A successive shift to x86 and rack servers, was “contributing to real weakness in the SMB business of incumbent hardware vendors.”

Storage vendors were also suffering, with enterprises buying fewer arrays, and the vast buying by the cloud giants forcing cost per GB downwards.

“Across all infrastructure categories, we also see spending shift away from incumbent hardware vendors and towards white box ODM vendors,” Stanton said. ®

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