The Winners and Losers in the Cloud War

Cloud war

By Fraser McKay, SVP of Products, Cloud Cruiser

Cloud war‘Who is winning in the Cloud?’  The answer is continuously evolving and has changed significantly

 

Public Cloud is Winning (over Private)

Three years ago the movement towards public cloud IaaS was in its very early stages.  We saw many companies who had large data center investments and large internal development capacity choosing to build their own internal clouds, often with OpenStack as part of the equation.  Public cloud was often viewed as a more expensive and less secure option that was better suited for mid-market organizations who had limited investment in existing data centers and limited internal development capacity.  What we’ve seen is that many of those large private cloud projects have stalled or been delayed as organizations struggle with coming up with a clear vision for their private clouds.  Also the technical challenges of building a private cloud to operate at scale are proving daunting to even the largest of organizations.  After a number of abortive attempts to roll-their-own, many organizations are re-evaluating the role of public cloud in their IT Services mix and time to value is playing an increasingly important role in whether to go public or private.  Gartner just released a Magic Quadrant report on Cloud IaaS providers (you will need a login) and it positions both AWS and Microsoft Azure in the leader quadrant with Google being the only player in the visionary spot.  All the others are bottom left quadrant known as “niche players”.  IaaS is still not a commodity but the largest-scale providers are continually lowering their prices, and automated managed services will substantially drive down the cost of infrastructure management over time, so cost advantages will continue to accrue to the providers.

 

Amazon continues to lead in Public Cloud, but still struggles with the Enterprise

Amazon is the de-facto leader in the public cloud space, but it’s hold on the crown looks less certain than it did even 2 years ago.  Its technical advantages are being closed rapidly as other major players in the space are investing heavily in their product stack.  It’s first mover advantage is limited mostly to mid-market companies and startups who have invested heavily in their ecosystem.  Despite high profile press releases showcasing customer wins, Amazon continues to struggle to parlay its market leadership position into a dominant position in the enterprise space.  The three factors that are acting as the biggest headwinds to market domination of the enterprise are lack of an install base to sell into, lack of a viable private/hybrid cloud story, and limited experience selling directly to the enterprise.  Amazon is investing heavily in all three of these areas, but in the meantime their competitors aren’t standing still so the window of opportunity to capitalize on their market position to gobble up market share is closing.

 

Microsoft is rapidly closing the gap

Three years ago Azure was the least in demand.  Now we’re seeing its rise.  When Satya Nadella laid down the gauntlet and said that Microsoft was a ‘Cloud First, Mobile First’ company, many were skeptical that a company as big as Microsoft with a recent history of limited capacity for innovation and change would be able to live up to that directive.  You’d be hard pressed to find such skeptics now.  Microsoft is rapidly closing the technical gap between AWS and Azure, but perhaps more importantly, this sleeping giant has activated it’s install base and enterprise sales force and is using them to good effect in dramatically growing their cloud business.  Microsoft has also recognized that it’s going to be a hybrid world (traditional IT living alongside cloud) for many years to come and has made great strides in building a comprehensive story that bridges traditional, private cloud and public cloud infrastructures all under a single vendor.  No other company in the world has this competitive advantage.

 

IBM is quietly positioning itself as a leader

Similar to Azure, there wasn’t much buzz among our customer base about IBM 3 years ago.  That has changed significantly particularly in the last 12 months or so as Big Blue has accelerated the pace of strategic investments to tool up for the cloud revolution that is coming.  With deep services capacity, a rapidly evolving technical stack, and extensive experience selling into and winning in the enterprise, IBM has a significant opportunity to be one of the giants left standing after the dust has settled in the transition from traditional IT to Cloud.  If it can match its actual commitment to cloud with its stated commitment to cloud, it is going to be a major player in this arena.

 

Google still a player but the window of opportunity is closing fast

Only a fool would write a company with Google’s resources and depth of experience in the cloud space off at this point, but if they don’t get focused they risk being left behind in a four horse race.  At present Google’s cloud strategy is somewhat unclear, and their commitment to IaaS in particular is a bit of an enigma for those who follow the space closely.  The narrative that I hear most often from customers is that they have considered Google Cloud as part of their solution stack, but concerns around the maturity of their platform, their ability to service the enterprise market and Google’s commitment to the cloud space in general usually push Google to the back seat in a buying situation.  Google has the technical ability and the resources to be a major player, but they need look no farther than the challenges Amazon is experiencing in enterprise market penetration to understand how hard it is for a consumer-focused organization to build a viable enterprise-based revenue channel.