Big 5 cloud providers tighten stranglehold on market
The latest figures from Synergy Research Group for the third quarter of this year reveal a prospering cloud infrastructure market.
While slightly lower than the growth rates achieved in the first two quarters of 2018, spending on cloud infrastructure services has still surged 45 percent from the same time last year.
However, it's the bigger players that are profiting with revenue growth at Microsoft, Google, and Alibaba again far exceeding the overall market growth rate, after all three gained bigger pieces of the pie with Microsoft in particular making substantial gains.
Despite this, Amazon continues its dominance and still holds a market share that is bigger than its next four competitors combined. Amazon managed to up its market share a percentage point to reach 34 percent, with the lower growth rate attributed to the fact that it already holds the majority of the market.
While still holding a significant portion of the market with just over seven percent, IBM's growth dropped off the pace but Synergy Research Group expects the tech giant to bounce back given its strong leadership in hosted private cloud services.
“This is another really strong set of numbers both for the leading cloud providers and for the market as a whole,” says Synergy Research Group chief analyst John Dinsdale.
“The growth rates are tailing off at some of the leading cloud providers but that is just the law of large numbers kicking in. You cannot keep on growing at 100 percent when you reach massive scale.
Unfortunately the huge growth experienced by the aforementioned five came at the expense of small-to-medium sized cloud operators. While many of them are still seeing acceptable revenue growth, Synergy Research Group says they are unable to keep pace with the larger competitors due to the lack of scale and financial muscle.
Most of the major cloud providers have released their financial figures for the third quarter, and based off these Synergy Research Group estimates quarterly cloud infrastructure service revenues (including IaaS, PaaS, and hosted private cloud services) are now well in excess of US$17 billion.
Looking deeper within the market, the 45 percent growth rate from the third quarter of 2018 compares with a 44 percent growth rate from the whole of 2017 and 50 percent for the whole of 2016. The biggest revenue earners within the market for the third quarter was Public IaaS and PaaS services, growing by 51 percent.
The dominance of the top five providers is most apparent when focusing just on public cloud, as they account for almost 75 percent of the total market. The cloud market is experiencing strong growth in all regions around the world.
“Interestingly, the role model for sustainable growth is market leader Amazon. Over the last ten quarters the AWS year-on-year growth rate in these markets has been pretty steady and has averaged just a little under 50 percent,” says Dinsdale.
“Given the need for huge scale, most cloud providers outside of the top five are being forced to focus on market niches or specific geographic regions.