Cloud wars: Big Four providers increase dominance, Alibaba grows fastest – Gartner

Gartner analyst talks Azure 'reliability' issue, AWS strategy 'misses', Google 'human' concerns

Analysis According to a Gartner report, the top five IaaS (Infrastructure as a service) cloud providers have increased their share of the global market to nearly 77 per cent, up from under 73 per cent in 2017.

Number three in the market after Amazon and Microsoft, and the fastest growing, is Alibaba, with a 7.7 per cent share in 2018.

The Chinese provider grew revenue by 92.6 per cent between 2017 and 2015, according to Gartner's figures, and now has a 7.7 per cent global market share.

Alibaba Cloud is growing not only in China, but also in southeast Asia and India. "There is a big push in India, in specific vertical industries namely internet, media and retail," Gartner Research VP Sid Nag told The Reg. While we should not expect the company to have much presence in Western Europe or the USA, it does have financial resources for aggressive R&D and will impact the expansion plans of AWS, Microsoft and Google in the markets where Alibaba is strong.

Table of global share of leading cloud IaaS providers

The total size of the IaaS public cloud services market grew 31.3 per cent in 2018, according to Gartner.

Amazon commands around three times the revenue of Microsoft, its nearest IaaS rival, but despite growing its revenue its market share dropped slightly, from 49.4 per cent to 47.8 per cent. "Being the leader with three times the revenue is hard to maintain. They are going to see that market share erode by definition," said Nag – though with only about 20 per cent of workloads moved to the public cloud to date, according to Nag, there is plenty of scope for future growth irrespective of overall share.

An issue for Amazon is that both its obvious rivals, Microsoft and Google, have strong SaaS (Software as a service) offerings, such as Microsoft's Office 365 and Google's G Suite. "As the market shifts to more of a compete cloud functionality as opposed to strictly IaaS and PaaS capabilities, with the SaaS piece becoming more and more relevant, they have to find a way to progress that," said Nag.

It is not that bad since AWS has a strong marketplace with third-party independent software vendors that offer SaaS applications, but it lacks what Nag calls a "flagship SaaS strategy".

Microsoft benefits from its strong presence in enterprise computing but Azure reliability "is becoming a major issue," Nag told The Reg. "In general they are reliable but of late they had some outages with their networking and another issue related to the availability of [Azure] Active Directory which they rely on for their cloud services to work."

Earlier this month, Azure CTO Mark Russinovich posted on this subject, acknowledging that "over the past 12 months … we experienced three unique and significant incidents that impacted customers during this time period, a data center outage in the South Central US region in September 2018, Azure Active Directory (Azure AD) Multi-Factor Authentication (MFA) challenges in November 2018, and DNS maintenance issues in May 2019."

Russinovich spells out steps which the company is taking to address this, but as Nag told us, "we have to wait and watch".

Google has grown revenue by 60.2 per cent between 2017 and 2018 and has a market share of 4 per cent, a long way behind AWS and Microsoft. "They struggled for a long time under the leadership of Diane Greene," said Nag. The issue, he said, was too much engineering focus and not enough effort in enterprise sales and marketing. Google was accustomed to relying on ads and web portals for its marketing. "The human touch has always been missing in Google's genre," Nag said.

This seems to be changing with the appointment of ex-Oracle man Thomas Kurian in January this year. "His focus has been heavily on the sales side and also on partnerships," said Nag. Google told investors that it plans to triple its cloud salesforce over the next few years, during the earnings call accompanying the release of its last quarterly results.

Google Anthos, a hybrid cloud and multi-cloud solution, will help the company penetrate the enterprise. "They want to play humble, they want to get into an enterprise with the mentality of multi-cloud, being the second cloud … and then land and expand," said Nag.

Nag said that despite the hype behind topics like AI and Machine Learning, it is traditional workloads that matter most to enterprise customers. "The real question is, how do you take disruptive technologies and apply them to pedestrian use cases that really matter?" he said.

Similarly, while the momentum behind Kubernetes is real, the difficulty is that workloads cannot quickly be transformed into container-based technology. The obstacles are not only technical. "A lot of non-technology elements that play in there, reluctance to do it, power fiefdoms, governance, concern about security, concern about IT ops and Sec ops and a host of other things," he said.

IBM has the distinction of being named in Gartner's summary, rather than languishing in "Others", but its IaaS market share declined slightly between 2017 and 2018 to 1.8 per cent. It lacks the hyperscale of AWS, Microsoft and Google. Nag suggests that "IBM has a strong services background. How do they take that and apply it to all clouds? They could win there."

What are the trends to watch? Alliances are key, said Nag. "Look at the recent announcements like AT&T and IBM, AT&T and Microsoft forming strategic alliances, you’re going to see more and more of these alliances."

Edge computing is also interesting, as enterprises adopt more cloud but cannot use public cloud in every location. "You need a smaller cloud stack for those locations. That will drive adoption of edge," said Nag.®

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