Microsoft Azure could overtake Amazon Web Services (AWS) as revenue leader in the public cloud market during the second half of 2017, claims US-based analyst house Pacific Crest.
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After analysing the financial performance of the 60 largest cloud companies, Pacific Crest has tipped Microsoft to overtake AWS in revenue terms later this year, reports financial news site The Street.
Brent Bracelin, senior research analyst at Pacific Crest, made the prediction in a research note, in which he said Microsoft’s positioning in the software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) segments should stand it in good stead in the years to come.
“We estimate that in the second half of this year, Microsoft’s Commercial Cloud segment could surpass AWS in absolute revenue, becoming the largest public cloud platform for the first time in 10 years and firmly marking its transition from cloud laggard to cloud leader,” said Bracelin.
According to Pacific Crest, the amount spent on cloud is set to triple over the next five years to $239bn, and Microsoft’s cloud service portfolio positions it well to pick up a large portion of that.
As previously reported by Computer Weekly, AWS has experienced a gradual slowdown in cloud revenue growth over successive quarters, with the firm reporting a 43% year-on-year rise in its most recent set of financial results (first quarter 2017), published in April.
At the time, the company said the results marked out AWS as a bone fide $14bn run rate business, while Microsoft claims its Commerical Cloud business is on course to hit a similar figure when its full-year results are announced at the end of June 2017.
However, Microsoft does not separate out Azure revenue within its financial results, and its Commercial Cloud segment also includes the revenue generated by its public cloud activities, as well as its line-of-business applications, including Office 365.
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But in IaaS market share terms, AWS remains the one to beat by a considerable margin, according to Gartner’s latest IaaS Magic Quadrant report, which claims that “many enterprises” now spend more than $5m a year on its technology.
“While not the ideal fit for every need, it has become the ‘safe choice’ in this market, appealing to customers that desire the broadest range of capabilities and long-term market leadership,” the report says.
The Gartner report places Microsoft in second place behind AWS, with the analyst reporting an average enterprise spend on Azure of about $500,000 a year, with “a few” exceeding $5m.
“Microsoft is frequently chosen as a strategic cloud provider by customers that are committed to Microsoft technologies or that like Microsoft’s overall cloud strategy, which spans IaaS, PaaS, SaaS and on-premise solutions,” the Magic Quadrant report states.
“Furthermore, many customers that are pursuing a multi-cloud strategy will use Azure for some of their workloads, and Microsoft’s on-premise Azure Stack software may potentially attract customers seeking hybrid solutions.”