Secure Interconnection Cloud

Pace Of Cloud Race Slows But The Competition Gets Bigger

Most of the major cloud providers have now released their Q1 earnings data, showing that the massive scale now reached in the cloud infrastructure market is beginning to settle.Amazon kept up a streak it has been on for the last couple of years and outpaced the overall market, with its own profit surging on the back of strong cloud performance. AWS now accounts for 50% of all Amazon’s revenue.

Super-scale global clouds

Data from Synergy Research Group last week shows that behind Amazon, a group of four cloud providers are also outpacing overall market growth and are gaining market share. Microsoft Azure, Google Cloud, Alibaba and Tencent all saw revenues increase by 70% or more year on year. Meanwhile, there is another group of four cloud providers that have substantial market share but are somewhat niche players and typically have lower growth rates – IBM, Salesforce, Oracle and Rackspace.

More runners in the race

As ever, the growth of individual cloud providers is dictated by business requirements at an enterprise level. AWS has become known for general purpose business compute; Google for its AI capabilities; and Microsoft Azure for those already invested in it’s software.

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Emerging clouds from Asia

There are of course a number of other contenders taking market share in the public cloud space, and as a Hong Kong headquartered company, PCCW Global is closer to some of those emerging from Asia, such as Alibaba Cloud and Tencent. The growth of these newcomers is almost assured as political implications and global regulations around data sovereignty rumble on. Not all companies will be comfortable with using a US-born public cloud provider and of course the same is true for those offering a viable alternative out of China.

Connectivity in a hybrid cloud environment

Regardless of the traction of the individual cloud providers, the evolution of networking means that most organisations will be looking for the ability to orchestrate connectivity in a hybrid cloud environment. Advancements in Software Defined Networking (SDN) have made great improvements to network orchestration inside the data center, where the organisation is in a single domain and in control of the machines. The challenge now is extending that capability to orchestrate connectivity into Amazon AWS, Microsoft Azure, Google Cloud, Ali Cloud or Tencent.

IaaS & PaaS growth at 41%

Growth may be plateauing but it is still sizeable. Synergy said that Q1 spend on cloud infrastructure services jumped 42% from the first quarter of 2018, with quarterly cloud infrastructure service revenues, including public IaaS and PaaS and hosted private cloud services, hitting well over $21 billion.

Public infrastructure and platform services account for the bulk of the market, growing by almost 50% over the quarter, although the researcher said this growth rate was somewhat lower than that seen throughout 2018 as the massive scale of the market enters a phase of more moderate growth.

“The decline in growth rate should not be viewed as a weakening market but as an inevitable consequence of a market that has now reached massive scale,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “As the market goes from strength to strength the pack of cloud providers that are chasing Amazon has bifurcated into high-growth challengers and lower growth niche-oriented providers. But Amazon retains its strong leadership position and continues to control a third of the worldwide market.”

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