The dominance of Amazon Web Services (AWS) and the growth of Microsoft, Google and IBM in the public cloud market is coming at the expense of smaller providers, according to Synergy Research Group.
Data for the fourth quarter of 2016 shows AWS has maintained its dominant share of the market, securing more than 40 percent, while the chasing trio have gained some ground and increased their aggregate market share by 5 percent over the last 12 months.
The combined force of Microsoft, Google and IBM now accounts for 23 percent of the total public Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) market, helped by particularly strong growth from Microsoft and Google.
However, this growth has come at a cost for the smaller companies in the industry. The next ten-ranking cloud providers have dropped down 1 percent in market share, although the group does include Alibaba and Oracle which are both experiencing growth.
But it’s the final tail of small-to-medium sized providers which are really struggling to break though, collectively dropping down by four percentage points to just an 18 percent market share.
“While a few cloud providers are growing at extraordinary rates, AWS continues to impress as a dominant market leader that has no intention of letting its crown slip,” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group.
“Achieving and maintaining a leadership position in this market takes huge ongoing investments in infrastructure, a continued expansion in the range of cloud services offered, strong credibility with the large enterprise sector, consistently strong execution, and the wholehearted and long-term backing of senior management. AWS is checking all of those boxes and any serious challengers need to do likewise.”
In terms of growth for the ‘big four’ cloud providers, Microsoft had an especially successful Q4 2016 as its Azure revenue increased by a staggering 93 percent.
Google and IBM also enjoyed increased cloud revenues – despite IBM experiencing an overall revenue decline – along with AWS, which reported a revenue jump of 47 percent year-on-year to $3.5 billion (£2.8bn).
Synergy estimates that total quarterly public cloud infrastructure service revenues have now reached well over $7 billion (£5.6bn) and continue to grow at almost 50 percent per year.
This is of course good news for the industry but, with such a small number of providers commanding an ever bigger piece of the pie, smaller company’s face an uphill battle to stay competitive.
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